The Journal Insurance: Indian market growth

Praveen Gupta offers a personal overview of the Indian insurance sector and explains how CII involvement will help shape the growth an development of this vast market

The Indian experience

the indian insurance saga has three clear time zones. Pre-nationalisation (Life business was nationalized in 1956 and Non-Life in 1972); Post-nationalisation; and since 1999 the opening up of the market to private players. Two generations of private insurers (early entrants and the more recent ones) co-exist with the public sector. The melting pot concocts new forms of diversity. The pedigree: Ex Commercial Union, Royal, Life Insurance Corporation (yes it was in General Insurance),South British and North British, Queensland, Yorkshire, Zurich. The list could cross the century mark. 104 companies operated pre-nationalisation. Given the colonial past, the English companies were the most blue blooded. State control marked the demise of one caste system and the opening up may have triggered the return of another. Brokers finding their feet: Arriving only in 2003 there are all shades. Aspirationally everyone wishes to be at the top of the international league. Thanks to the maximum equity restriction for foreign

players at 26 per cent, there is yet to be a 100 percent international broker. The new order: Nor is there a scope for a fully owned foreign company. The current list is almost fifty-fifty life and non-life companies. Most of them joint ventures of an Indian entity (generally private sector) and an overseas player. Standalone is a rarity. Health, agriculture and credit segments have mono-lines. All are nonlisted, as yet. Demise of pricing: The voluminous tariffs are already forgotten. The pocket editions are getting vestigial. The disbanding of the Tariff Advisory Committee (responsible for all pricing) marked the demystification of the pricing logic in the process throwing caution to the wind. The demise of tariffs and the short supply of trained underwriters have serious bottom line implications. As of now, profitable companies are far and few. Despite the varying origins most employees get carried away with the top-line although it means the customer is smiling. The Actuary arrives: The average age of an

February/March 2010 Insurance

actuary until the market reopened hovered near 70 years! Thanks to young candidates pitching in the average is set for a drastic pull back. In future they will be foreign and Indian qualified. Gamekeepers to hunters: Persuading potential employees to move out of their state owned comfort zones (the only available pool of qualified insurance professionals) was never easy. I am convinced some would say and then hasten to add but would you mind persuading my wife and sometimes, even my mom!. Things changed quickly. Some successful ones dared to even become brokers. Job market v career path: Lots of youngsters were attracted to what was billed as the sunrise industry. They came fresh from the management schools; FMCGs and other financial services. A segmentation emerged. Some progressing well with insurance learning and many moving on to greener pastures. Karma way: The Bimawalla or Bimadalal (literally insurance intermediary) was a

pull of health insurance. From Nano to Bentley, all car segments are driving auto insurance as never before. A globally integrating India necessitates growing forms of liability covers. Prospects for micro-insurance, at the bottom of pyramid, excite everyone. With the low hanging fruit gone and the rapid growth phase behind for the moment, the regulator warns the honeymoon period is over. A country, with 22 official and 350 other major languages, continues to transact insurance in one - English. Some unity in diversity. With the CII and Insurance Institute of India (III) working closely, the win-win possibilities here in India are immense. J caste nomenclature in parts of western India. While some retain the surname whether or not in the trade, a new breed wishing to make a mark is rapidly infusing the marketplace. Product pull and push: Health, liability and auto are the three fastest growing lines of business. Nuclear families and racing health inflation is pacing the Praveen Gupta, FCII is CEO, Raheja QBE General Insurance Company Ltd, Mumbai, and a member of the CII Diversity Sub Group. Group would be delighted to hear from anyone who is interested in the work of the group or has any views or ideas to promote diversity either nationally/ internationally or at a local level.