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How brave is the new world?

Is courage driven by deep insights, naïve hopes, or sheer determination to fix the ills of the world? Is there real strength behind vision?

In 2018, what a bold and brave new world it has become for reinsurance in India. The changes are rapid and vibrant and, more importantly, responsive too.

This 11th India Rendezvous, with an amazing turnout of some 700 delegates from 35 countries, underscores India’s position as a global hot spot, it being one of the top-seven largest economies in the world. With an insurance penetration of just 0.77% in the general insurance sector, the potential is limitless. At this year’s Rendezvous, there are some 250 registered overseas delegates, while many of the Indian delegates represent the overseas branch operations.

Last year, when new rules were announced in the same week as the 10th Rendezvous, several of the international delegates even packed up and left, thinking they have been formally shut out. Yet those who stayed behind had faith in the Indian “enigmatic” spirit of finding solutions through any apparent road blocks. As a seer said: “No matter what the bottleneck, everything, like water, finds its way to the rivers, seas and oceans.” It is this very spirit that has set the global reinsurance market abuzz about India.

This Rendezvous comes with great anticipation in the air with the new implementation rules to be formalised soon.

Foreign reinsurers all over the world are drawn to India due to business and geographical diversity and mix, and its sheer size and potential.

The local Indian insurance industry, itself a net exporter of insurance talent globally, is fully aware of the partnership role that reinsurance plays in managing risks, increasing capital base, and at times even helping with balance sheet management. Hence, the interdependence.

Though the current Indian business ceded to reinsurers is about US$6 billion, everyone is investing in the greater potential. And India has the extra cache of having a very proactive reinsurance broking force that is both local and yet internationally connected to the furthest corners.

With the importance of agriculture, massive infrastructure projects and the high incidence of natural disasters – rains, floods, droughts and earthquakes – reinsurers cannot afford not to be here.

GIC Re, as the national and now public-listed reinsurer, does take its dominant responsibilities very seriously to support the partnership with the cedants. This Rendezvous would not have been possible without the active involvement and support of GIC Re and its CMD, Mrs Alice Vaidyan.

It is heartening to see so many local insurers and reinsurance brokers taking ownership in the success of the India Rendezvous and supporting it actively.

The interactive dialogue session just before the launch cocktail by GIFT City, with the support of IRDAI on the Business and Operating Guidelines for Direct Insurer (Life and General) and Reinsurers, is indeed a big boost for all as opportunities abound.

It’s “Open Sesame” as they say.

Mr Sivam Subramaniam
Editor-in-Chief, Asia Insurance Review

 

 

Some pride, some satisfaction, some hopes!

As I sit down to pen my piece for the 11th India Rendezvous, I look back at 2017 with some pride, some satisfaction and some hopes. Pride for what we achieved during the year, satisfaction for the fact that we covered quite a distance and hopes for an even more successful year ahead. Indeed, 2017 was a year of transformation for the Indian insurance industry.

A lot happened in 2017 that brought about a sea change in the Indian insurance ecosystem. The general insurance industry crossed the INR1 trillion mark in gross written premiums during the financial year 2016/17. The volume of gross direct premiums (non-life) increased twelve-fold since 2001, when the industry opened up for private players.

Going further, 2017 began with the overseas reinsurance companies getting the regulatory go-ahead for establishing their India branches. Today, we have nine India branches of overseas reinsurers operating in the country, including Lloyd’s of London.

2017 also saw many of the insurance players, including GIC Re, making a debut on the Indian bourses. This will make all of us more conscious of our responsibilities to our customers. I am sure, apart from bringing in more capital for the industry, it will also usher in a new class of stakeholders in the industry. This would also serve as a much-needed fillip for enhancing insurance awareness in the country’s population. During the year, the industry also adopted technological advances happening in digitalisation. These have made insurance more customer-centric and transparent.

Today, GIC Re has a 60% market share in the Indian reinsurance market, and I am confident that we will maintain the market leadership. During 2017, based on our gross written premiums, we were ranked the 12th largest global reinsurer. Overall, 2017 has been a highly fruitful one for GIC Re and my wish list for 2018 includes seeing GIC Re in the global top-10 reinsurers’ list.

I am confident that the Indian insurance industry will continue to innovate and progress with sustainable growth. With this, I close and welcome the 700-plus delegates to the 11th India Rendezvous.

Mrs Alice G Vaidyan
Chairman-cum-Managing Director, GIC Re

 

 

IRDAI proposes qualified protection for domestic reinsurance turf

The IRDAI (Reinsurance) Regulations, 2018 Exposure Draft has proposed that Indian reinsurers will continue to get order of preference for placing business, but the order of preference will be waived for some of the major insurance lines. Asia Insurance Review brings you the salient features and some observations from the market on the regulatory proposal.

Last May, the IRDAI appointed a Reinsurance Expert Committee (REC) to revisit the Indian reinsurance regulations. The REC submitted its report in November 2017 and, based on the Committee’s recommendations, the Authority issued an exposure draft, “Insurance Regulatory and Development Authority of India (Reinsurance) Regulations, 2018 (Annexure I)”.

According to the exposure draft, which invites comments or suggestions from the stakeholders of the insurance industry, the order of preference for placing business with reinsurers will be Indian reinsurers who have been transacting business for not less than the past three continuous years, and then to other Indian reinsurers.

This will be followed by foreign reinsurers’ branches and then cross-border reinsurers (CBRs).

The General Insurance Corporation of India (GIC Re) is the only Indian reinsurer with more than three years’ business track record in the country.

Two categories of reinsurers

The expert committee, however, recommended that reinsurers be classified into two categories for offer of participation in the following order of preference:

  • GIC Re and then [simultaneously to other] Indian reinsurers, CBRs, if any, whose terms for a minimum line size (say 5% for treaty and 10% for facultative risks) established the best terms, foreign reinsurers’ branches and Lloyd’s India and Indian insurers.
  • Reinsurers in Special Economic Zones (SEZs), joint venture partners of Indian insurers, reinsurers and other CBRs satisfying the eligibility criteria (including overseas reinsurance entities of FRBs’ parent group).

In its report, the REC said that there is merit in the representation of life reinsurers seeking waiver from Order of Preference stipulations, given the consultative and long-term risk management relationship between the life insurer and a reinsurer.

The Committee felt that aviation, life insurance, marine hull, large infrastructure projects petrochemical and refinery plants, large power plants, oil and energy, specialised, emerging and volatile risks with high loss potential as well as retrocessions, rely on the international reinsurance market for design of the covers, wordings, conditions, capacity, and support.

Hence, the order of preference for reinsurance cessions can be waived in such cases as may be permitted by the Authority from time to time.

The exposure draft said that the order of preference will not apply for life insurance business or for inter-company arrangements of insurers transacting direct insurance business in respect of fire, engineering and marine hull insurance business.

The draft, however, said: “Indian insurers, transacting life insurance business, shall endeavour to utilise Indian capacity before placing with the CBRs.”

Industry response

The industry’s response to the REC’s recommendations and draft guidelines has been mixed.

The fact that draft reinsurance regulations do allow international best terms to be obtained is being termed a positive move, but there are still several hurdles remaining.

On the flip side, industry sources said that the overall framework of the Reinsurance Regulations proposed with order of preference essentially gives priority of business to select reinsurers over other reinsurers, and this is seen as trying to help certain businesses with guaranteed business, which may be devoid of consumer interest.

It is also felt that the complicated process of ensuring that businesses are given to select reinsurers creates more processes, administration and compliance that adds no value to the end customer and to the insurance/reinsurance market.

Overall, the feeling is that the prescribed order of preference of the regulations remains anti-competitive and against the ease of doing business.

Foreign reinsurers have, in the past, also expressed discontent over the Indian reinsurers being given the first place in the order of priority.

Industry sources have also questioned the draft regulation about the first priority to Indian reinsurers having written reinsurance business in the past three continuous years. This implies that an Indian reinsurer with less than three years of standing will be left to write only obligatory business. In case obligatory cession is done away with by IRDAI after couple of years, as is expected, what will a new Indian reinsurer do for three years till it becomes eligible to write business?

Industry observers also felt that while Indian insurers accepting inward business is fine, as far as mega/large risks are concerned, there should be some limit for all the insurance companies combined, say 10% of total risk because otherwise all the companies will be exposing their balance sheet. In the event of a big loss, the whole market would be adversely affected.

The insurance regulator has already issued the guidelines for setting up of International Financial Service Centre Insurance Offices (IIOs). With this, IRDAI has put in place the process of registration and operations of insurers, reinsurers in IFSC Special Economic Zones.

 

 

Cross-border reinsurers crucial for market development

Four reinsurance brokers give their take on the reinsurance committee recommendations.

“Keeping the market competitive and focused on the interest of policyholders at the core seems to have taken a backseat. India and the world has seen that protectionist measures only create inefficiencies and compromise consumer interests. The prescribed order of preference of the regulations remains anti-competitive and against the ease of doing business.”

Mr Sanjay Kedia
Country Head & CEO, Marsh India


“The Reinsurance Committee’s recommendations focus mainly on the order of preference. By putting the CBR on par with GIC Re, FBR and Lloyd’s for the sake of seeking quotations is a move taken in sync with market practices. The role of CBR in the Indian market is as critical as other players, purely because they have been supporting the market through thick and thin. In the long run, their role will come down as and when FBR and Lloyd’s increase their appetite to support the Indian market across all classes of business.”

Mr V Ramakrishna
Chairman, India Insure Risk Management & Insurance Broking Services


“The recommendations appear to be meeting the changing scenario and can be fine-tuned to include the continuation of well-established relationships of all category of reinsurers who have supported the Indian market in good and bad times. The recommendations should be considered for an initial period of three years and reviewed thereafter.”

Mr Atul Boda
Chairman, J B Boda


“These recommendations are in line with market expectations. At the same time, I see some change when it comes to placement, ie, offering the business to those CBRs who have quoted for the terms. This will encourage reinsurers (CBRs) to quote the terms. However, in my view, the recommendations / regulations can be reviewed after two or three renewal seasons.”

Mr Harshad Parekh
CEO, Interlink Insurance & Reinsurance Brokers Pvt Ltd

 

 

Glimpses from IR’s 10th anniversary celebrations

The idea of the India Rendezvous was conceived in 2008 by Asia Insurance Review with GIC Re as co-organiser. Over the past decade, the event has grown from strength to strength and is today a must-attend in the insurance professionals’ calendar.

This year’s Rendezvous brings together close to 700 participants from over 30 countries, highlighting the growing importance of the Indian market to the international insurance community. Here, we bring you some snapshots from the last year’s rendezvous.

 

Insurance can make Indian economy more resilient

Business was mixed with pleasure at the Welcome Cocktail of the 11th India Rendezvous 2018 which opened in Mumbai yesterday with around 700 plus numbers from over 30 countries registered, which is a record till date.

In her Global Keynote Address at the Rendezvous last evening, Ms Inga Beale, CEO of Lloyd’s of London, sounded a note of both caution and optimism for India.

Concentration of assets

Highlighting the country’s rapid urbanisation and the concentration of assets in these urban locations and the consequential enhanced risks, she said the Indian economy can be adversely affected if these critical aspects are not well taken care of.

Zeroing in on Mumbai, the Maximum City, she said: “It is a risky place where a lot of value is concentrated in a very small area. Lloyd’s is here to enhance the expertise of the local insurance market so that the emerging risks can be adequately covered and protected.”

Agriculture insurance

Ms Beale also noted the dramatic upsurge in agriculture insurance in India and said that, while this has contributed to a rise in insurance penetration in India, insurance penetration still remains very low by global benchmarks. This, however, provides a tremendous opportunity for the industry to make the most of it for the larger good.

Attracting the young

Speaking about bringing in fresh talent into the insurance industry, Ms Beale said: “It is our collective responsibility to sell the insurance story to young bright minds. There is a lot that the young minds can contribute to the growth and development of the industry provided we can ignite their passion for the industry.”

Insurance can make the economy more resilient

As the world’s largest democracy and third-largest economy in Asia, India has achieved a significant and stable economic growth despite the macroeconomic turbulence around the world.

However, there are no guarantees that these impressive growth rates are sustainable because India is exposed to increasing number of natural catastrophes.

Lloyd’s Global Underinsurance Report of 2012 had said that a one percentage point increase in insurance penetration is associated with a reduced burden on the taxpayer of one fifth of estimated total damage in case of a loss.

Ms Beale said: “The insurance industry can contribute a lot towards making the Indian economy more resilient. Lloyd’s can help support the expansion of insurance penetration in India and limit the economic impact of catastrophes.”

She added: “Lloyd’s will help create a thriving hub for reinsurance in India, accelerate the international growth of domestic insurers, and safeguard economic growth in the face of disasters.”

Growth since liberalisation

Earlier in the day Ms Beale, addressing a press conference, said that she was impressed by the 12-15% growth which the Indian non-life insurance industry has been notching up over the years since the market was liberalised. “Very few markets in the world have shown such a double-digit growth,’’ she added.

Lloyd’s in India

Mentioning that it has been a long journey for Lloyd’s in India to arrive at this stage where Lloyd’s India branch is functioning today, Ms Beale said: “From Lloyd’s perspective, we are very excited about working in India because we believe we can play a valuable supporting role – working in partnership with the local market.”

 

 

5 major international reinsurance trends for 2018

Swiss Re Institute compiled a list of the most relevant issues confronting the global insurance and reinsurance markets. We highlight five key issues that will impact the Asian market.

  1. Protectionism on the rise

    After years of increasing globalisation, the political landscape has become increasingly impacted by protectionism (the US) and compartmentalisation (Brexit, Catalonia). Escalation to an outright trade war has the potential to harm global growth if the US stance becomes more aggressive.

  2. Cyber risk

    The cyber insurance market is expanding rapidly. An important factor influencing the pace and scope of future market development will be the capture and analysis of data needed to underwrite cyber risks accurately. Product and process innovation can help make cyber risk more manageable, but cooperation between companies, insurers and governments will be essential to increase resilience. Accumulation risk from cyber products is a major concern of insurers, dampening the growth of the market, and may need government assistance to improve the insurability of cyber risk.

  3. Increasing motor insurance claims

    Behavioural changes have driven a surge in motor claims across the world. Insurers have increased rates to catch up with rising claims costs. Both frequency and severity of losses are up. More miles driven, higher road density and speeds, and distracted driving due to use of handhelds while at the wheel have contributed to the spike in loss frequency.

  4. Innovating to expand the scope of insurability

    Insurance solutions are increasingly being used to protect earnings and cashflow risks. Some previously uninsurable non-core business risks can now be insured – to some degree – due to the evolution of parametric triggers, indemnity structures, and data and modelling advances.

  5. Flood protection gap

    Flood is the most wide-reaching and frequent hazard. Yet, a significant share of flood exposures globally remain uninsured both in the emerging and in mature insurance markets. Today, risk-assessment tools exist that allow insurers to fairly price flood risk. However, collaboration between government and the insurance industry is key to closing existing flood protection gaps.

 

 

A vision for the future of India’s insurance industry

Students from the National Insurance Academy (NIA) share their vision for the future of India’s insurance industry, including ways for the industry to transform itself from an emerging market to a mature one and empowering the customer.

  1. Trust deficit still exists

    The frequent stories appearing in the media indicate that the service quality of Indian insurers continue to be afflicted by the same old deficiencies like the rejection of claims on frivolous grounds. Even when settled, the process and the delay in settlement leave a bad taste in customers’ mouth. An ineffective redressal mechanism adds to the frustration. The speed of claims settlement shows improvement only in statistics and not much in reality. Also, many risks remain uninsured; there is a higher level of lapses; the number of miss-selling cases has not decreased; and competitiveness is reflected only in pricing. In short, the trust level seems to be stuck at the same point.

  2. Conditions ripe for take-off

    Some positives for the insurance industry to capitalise on in its consolidation phase and poise itself for a takeoff mode include: a stable and strong central government, robust economic growth and governmental push in spreading the safety net, including insurance and pension schemes.

    The industry has been suffering underwriting losses for many years now and is surviving on investment income. With a gradual reduction in investment returns, investments will not be able to compensate for poor underwriting practices. All insurers will be under tremendous pressure to improve their underwriting performance because of increased public and regulatory scrutiny.

    The current situation is the best and right time for a long-awaited course correction and shareholders and the regulator should not allow insurers to fritter away this opportunity.

  3. Simplify products for the masses

    A serious challenge facing the industry is that of the simplification of insurance products. This simplification has several aspects, one of which is that of language. Most customers do not read policy documents because of their complicated legal and technical jargon. Consequently, most do not understand what is written in a policy document.

    The foundation of trust cannot be built on deficient communication. Though attempts have been made in better communication through pamphlets, advertisements in local languages and intermediaries engaging the customers in local languages, no efforts are visible in using simple language in drafting the product details.

    There is also an urgent need to bring out product details in the local vernacular languages.

  4. Insurers must adapt to stay relevant

    The next few years will see an increased use of predictive analysis to prepare oneself for the proactive management of adverse risk developments, sophisticated fact-based real-time decision support tools to equip people for consistent and accurate decisions, and automation of simple, straightforward and low-complexity tasks for a higher level of efficiency.

    The future belongs to those who quickly adopt developments like the Internet of Things, wearables, telematics, artificial intelligence, chat-bots, Big Data and Blockchain. We see the market having little choice but to willingly adapt to these technological trends.

  5. Agriculture holds the key

    The government is increasingly focusing on the agriculture sector, coupled with the digitisation of land records, crop details, and the adoption of new technology along with agriculture insurance. Despite concerted efforts in the last several years, the rural market remains underinsured, and so rural and micro insurance will continue to be the prime focus of the Indian insurance sector.

  6. Create a Nat CAT reserve

    Natural disasters are showing greater frequency and increased severity, and continue to elude human judgement. Therefore, the best remedy to deal with catastrophes is to create a CAT reserve. With no regulatory push, not much progress has been made in this area. Globally, a large gap exists between the CAT losses and insured losses and this gap is even more acute in India, as only 11% of CAT losses are covered by insurers against an average 25% to 30% covered in major markets.

  7. Towards a mature market

    There will be more insurance IPOs, consolidation via mergers, transition from current solvency regime to the risk-based capital regime, leading to better utilisation of capital.

    The road towards maturity appears feasible with expected developments in objective pricing, literacy, simplification, technology adoption, sustained efforts in rural, micro and agricultural insurance, and capacity enhancement to handle natural disasters.

    These steps are also required to be supported by efforts in eradicating the chronic problems frequently highlighted by the media of unfilled vacancies in redressal institutions like ombudsman, consumer forums and the Courts.

 

 

A night of camaraderie and fun

The Welcome Cocktail of the 11th India Rendezvous yesterday evening was agog with 500 delegates hobnobbing and discussing business. The highlight of the evening was a special address by Ms Inga Beale, CEO, Lloyd’s of London, who was on an official two-day trip to the city. The cocktail was sponsored by ACE Insurance Brokers Pvt Ltd, a leading composite broker and risk management company.

Bilateral meetings in full swing

 
 

 

 

India: Re/insurance industry creates a new world for itself

India today is a land of opportunities, and the ambient business environment in the country is characterised by exuberance and optimism. The feel-good climate is also reflected among reinsurance and insurance market participants who have received a shot-in-the-arm by way of the second phase of liberalisation of the sector, according to Mrs Alice G Vaidyan, Chairman-cum-Managing Director of GIC Re, in her special welcome address at the opening session yesterday of the 11th India Rendezvous in Mumbai.

Giving a bird’s eye view of what the Indian insurance industry achieved in 2017, when several foreign reinsurers started onshore reinsurance business in India, she said: “New reinsurers entering India provide additional capacity in the Indian market and bring with them international expertise. Cedants get access to new and innovative products. All these advantages have the potential to accelerate increase in insurance penetration in India.”

In his turn, Mr Sivam Subramaniam, Editor-in-Chief of Asia Insurance Review, which is co-organiser of the Rendezvous with GIC Re, said in his brief but succinct opening remarks that the Indian insurance industry can contribute a lot at this stage when the Indian economy is at a high point in its growth trajectory and there are eager expectations from all stakeholders. With the enormous potential that exists, there is much that can be done.

Emerging countries are rebounding, and India is on top of the scale

Mr Christian Delannes, Chief Financial Officer of SCOR, Global P&C, in his Industry Keynote Address, spoke about the high growth rate of the Indian (P&C) insurance industry since 2011 which is close to 20%.

“The market profitability (and its underwriting) is totally driven by buoyant investment returns which more than offset technical losses with combined ratios consistently above 110%,” he said.

To bring about substantial positive change in the Indian reinsurance market, it is important “to conduct the change in a collaborative and effective way, creating a genuine public-private-international convergence,” Mr Delannes added.

Key drivers of growth

In his Special Address, Mr G Srinivasan, Chairman-cum-Managing Director, New India Assurance Company, enumerated the key drivers to growth in the Indian insurance market.

He said that the government-led initiative for financial inclusion has brought 618 million persons under government-sponsored schemes in 2016-17. These include the Prime Minister’s Jan Dhan Yojana, Pradhan Mantri Suraksha Beema Yojana and some others.

“While direct government initiatives have been a major impetus to growth of the industry, several other factors, including legislative, technological, socio-economic and general economic factors, have also played an important role in this direction,” said Mr Srinivasan.

India today has nine branches of foreign reinsurers and two home-grown reinsurers. India is a very large country on a high-growth trajectory, and its insurance and reinsurance sectors have immense scope.

Much has happened on the (re)insurance front in India in the last one year. Hence, it is imperative that the various stakeholders of the Indian insurance industry explore the transforming landscape of the Indian insurance industry.

 

 

Strategy and execution are co-related

The panel discussion on “Strategic Priorities for CEOs” witnessed a very lively discussion among panellists on the importance of technology and new products in the strategy of a company.

Adapting to advance and newer technology was key to the functioning of every company, said the panellists.

“Technology plays a key role in understanding customer needs and, as an industry, we need to give them what they want,” said Ms R M Vishakha, MD & CEO, India First Life Insurance Company. Highlighting that strategy and execution are co-related, she spoke on the brilliance that goes behind strategising and then executing plans.

The customer should be central to every strategy, said Mr K Sanath Kumar, CMD, National Insurance Company. “It would be extremely dangerous if we have a strategy that does not talk about the customer,” he said. Companies need to get connected with their customers, he added.

Technology will be the key enabler for the growth and development of the insurance market in India, said Mr Joseph Augustine, CEO, XL Catlin. “Foreign players who come into the market bring in new technology and develop products for the local market,” he said.

Highlighting the key advantages of IFSCs, including tax exemptions, Mr Ajay Pandey, MD & Group CEO, GIFT City, invited insurers and reinsurers to set up offices in GIFT City, which was India’s only IFSC. “India has multiple growth opportunities, and companies can also tap into the vast overseas Indian population from this centre,” he said.

Summing up the discussions, Mr Kent Chaplin, CEO, Lloyd’s, Asia Pacific, and Chairman of the panel, said the future was bright for the Indian market and companies needed to keep their eyes open to tap into the opportunities.

 

 

Need to create awareness of cyber risk

The panel on ”Cyber security and cyber resilience” brought to the fore the danger that the world faces today from cyber risks.

In his opening address, Dr George Thomas, Professor, Insurance Institute of India, spoke on how the world today was grappling with the problem of cyber risks and insurers need to come out with solutions.

Cyber risks are among the top-5 challenges faced by most organisations worldwide, said Mr Anil Arora, Director, ACE Insurance Brokers. “None of us can escape the threats that comes in with all the technology we use,” he said.

Mr N Ramaswamy, DGM, GIC Re, called for active monitoring to prevent attacks. “When an event happens, the breach results in huge data loss and intellectual property rights violations,” he said.

Speaking from a customer point of view, Mr Srikanth Gurunathan, Co-Founder & CTO, Infintus Innovations, said that the insurance industry needs to design products according to customer needs. “With 130 billion connected devices cyber has become huge business as people are looking as how to make money,” he said. The growth in e-commerce will only aggravate the situation and so insurers will need to act fast and come out with solutions.

“Data is more valuable than money in today’s world,” said Mr Ashutosh Bhosle, AVP, Tata AIG. His company has seen a spike in cyber insurance proposals.

Speaking from an international reinsurers’ perspective, Ms Nighat Khan, Country Head, P&C - India, Gen Re, called for the creating of an ecosystem and environment against cyber risks. “We have to be cognizant of the fact that there are cyber risks and this is an evolving technology,’ she said.

The panel was chaired by Dr Thomas.

 

 

Popularising insurance education

The Insurance Institute of India (III) has been a pioneer in the field of insurance education in India and is on an expansion mode. Mr P Venugopal, Secretary General of III updates us on the various plans and activities of the Institute, especially those in the reinsurance space.

Insurance education in India is quite good. Lakhs of insurance agents get trained every year; hundreds of people working in broking firms, corporate agencies, insurance marketing firms, banks and common service centres also received training.

Direct Recruit Officers of most insurers need to clear III’s Licentiate level examination within their first year and III’s Associate/Fellowship are mandatory for many specific functions as well.

Apart from III, there are other universities and colleges which provide insurance education.

The challenge that we are facing in the Institute and the College of Insurance is setting and improving the standards of quality education.

At III, we take the trouble to keep our courses revised, updated and relevant to the industry – a continuous process requiring us to be on our toes all the time. What disturbs me is the quality of insurance education provided by many other institutions from where the industry recruits employees.

I found that though well-meaning and reputable, some institutions are inadvertently using and recommending courses that are not suitable for training insurance professionals.

I have met quite a few Vice-Chancellors, Deans and Professors in many parts of the country and given them access to III’s course material, e-learning, webinars and lending library.

I have also introduced them to serving and retired Associates and Fellows of the Institute in the local areas so that they could access experienced insurance persons for academic support.

At III, we are able to conduct seminars for the students of these institutions, connecting them with seniors of the insurance industry. In addition, we can provide insurance training to college professors.

III popularising insurance education

The III is a body formed by the industry, and practically the Who’s Who of the Indian insurance industry are members of the Institute.

Over the last 62 years, the Institute has been working with the insurance industry and the Regulator since 2000 to build the academic and professional competencies in the country.

We are also electronically connected to more than a hundred thousand insurance men and women every week through our newsletters.

We also believe that visibility is important, and that is why we associate ourselves with some of the important seminars and events of the industry.

III’s initiatives for popularising insurance education

Increasing insurance awareness and educating the customers, especially the future customers, are onerous tasks that the industry and the Regulator are taking on.

The Institute has always been supporting such industry endeavours.

Our 91 Associated Institutes across the country support IRDAI initiatives in this direction by distributing awareness material. They also continue to organise local and national level seminars as well as workshops in schools and colleges.

International plans

We are active in the SAARC region and have conducted training programmes and seminars in Sri Lanka, Bangladesh and Bhutan.

Recently, we partnered the Bangladesh Insurance Association (BIA) and the Bangladesh Institute for Professional Development (BIPD) to conduct a seminar in Dhaka which was attended by the Honourable Finance Minister of Bangladesh.

In ASEAN, we have signed an MoU with the FRD of the Republic of Myanmar to build capacity for their insurance industry. This MoU was signed in the august presence of our Prime Minister, Mr Narendra Modi and the State Counsellor of Myanmar, Daw Aung San Suu Kyi. We have just concluded a training programme for them at Yangon.

There is more to be done in ASEAN and we have only just begun.

Specialised reinsurance courses at III

Reinsurers are an integral part of the system, and we support them in multiple ways.

We have done a training programme for GIC Re, drawing specialised faculty from the London market.

In the last few years, we have trained technical personnel of GIC Re’s cedant companies, from around 40 countries on technical areas of general insurance and reinsurance.

We are also working on a diploma programme on reinsurance.

 

 

A hive of activity

The rooms at the 11th India Rendezvous were abuzz with bilateral meetings. Besides the Lloyd’s coffee room, delegates gathered for private meetings at other venues in the hotel. Teabreaks were also a time to catch up with each other.

Special meeting for NIA students

Faculty members and 85 students from the National Insurance Academy in Pune came to Mumbai to experience first-hand the India Rendezvous and to witness how reinsurance business is conducted around the world. A special Q&A session was organised for the students where Mr Sivam Subramaniam answered queries from the students.

 

 

Digital disruption and the second-half of the chess board

Sounding a prophetic message of doom and gloom for the insurance industry with the advent and rapid progress of InsurTech, Mr Peter Hacker, Co-Founder & Partner, Distinction.Global, InsurTech opinion leader and author, gave insurers a wakeup call urging them to adapt and evolve or perish.

Technology and automation, he said, are moving at a pace that humans cannot match. “Disruption in the insurance and reinsurance industry has become the new normal. Anything that cannot be automated will be extremely valuable in the future,” he said, in a special keynote address yesterday at the SIRC. He mentioned here that creativity, intuition, emotion and ethics will be of immense value in the future.

Intangible assets and risks

Mr Hacker pointed out that, today, market capitalisation is driven by intangible assets. He said that while the conventional property and casualty risks will remain, the future will be dominated by mobility and intangible assets. “From an insurer’s point of view there are huge opportunities because as the more the risk becomes intangible, the higher will be its severity,” he added.

He said Asia is now at a stage where digitisation and online models are disrupting conventional business models. Three trends driving this revolution are the galloping growth of mobile devices, rising popularity of social media and wider acceptance of online commerce.

Asia, which is home to 60% of the global population, has 2.3 billion mobile subscribers, who form 58% of the total global subscriber base . Furthermore, it is the Asian mobile phone giants like Sony, Huawei and Samsung that have a combined 70% share of the global smart phone market.

“There is a huge opportunity for insurers here to develop covers for the intangible risks of these companies against cyber risk threats,” said Mr Hacker.

He highlighted that the ‘Want’ vs ‘Fang’ (Facebook, Amazon, Netflix and Google) race has just started where billions of people are connected to the Web and disruptions will happen in unprecedented waves. “The era of disruptive automation and digitisation is fast approaching and millions of jobs are at risk,” he said. He mentioned a recent report by the ILO which said that 56% of all salaried jobs in countries like Cambodia, Indonesia, Philippines, Thailand and Vietnam could be replaced by automation and advanced technologies like 3D printing.

Insurers will have their “Tesla” moment

Insurers and reinsurers will have their “Tesla” moment and for this, they need to adapt to the changes. “The industry will have to embrace InsurTech by working together with it and you can have your 'Tesla' moment, and I believe that we are at the beginning of a new age of insurance,” said Mr Hacker.

He called upon the industry to be at the forefront and not on the back foot by taking data driven decisions, re-skilling and being innovative. The insurance industry must focus on data analytics as well as hone skills and develop talent and leadership within the organisation. “This will require industry-wide collaboration, capital market backing and governmental support,” he said.

 

 

New insurer/reinsurer roles morphing into one

New models of reinsurers and insurers will emerge in the not too distant future, with the lines between them blurring as interconnectedness grows both within the insurance sector and outside it, said speakers at a panel discussion held at the SIRC yesterday.

Pointing out that there will be more consolidation of the roles of these players, Mr George Kesselman, founder of InsurTech Asia, said: “We will see a ‘hybrid’ period of quasi insurers/reinsurers, which will be more general in their roles, consume less value and which may take the shape of a multi-role entity.”

He said that reinsurers will move closer to the forefront of risks, and engage more at the distribution level, together with startups and new players. “Rather than wait for someone to send the risks to you, they would ask, how do you enable (covering) new types of risks?”

Another panelist, Mr Anthony Hobrow, CEO of consultancy NexAssure Group, expressed optimism that the business pie in this new environment is not shrinking, but will instead continue to grow. The trend is one of merely shifting the balance of growth from the West to the Africa and Asia, where insurance penetration is low and the industry has a less strong presence. “Risks are increasing, they are also just getting more technical,” he added.

Age of machines

A fundamental shift that the industry will need to get used to is that the focus of insurance, such as motor, will shift from human error to machine error and technology-focused people will be the ones driving change, said Mr Hobrow. For instance, in motor, insurance will shift from driver to manufacturer. Operations, processes and legal contracts will be automated, and insurance wordings will be prepared via artificial intelligence.

He noted that in tandem, the skill base that is required within an insurance organisation will shift enormously too--and not just at a junior level. ‘How many people in the boardroom really understand blockchain?” he asked, citing the challenges.

Talent

The exponential increase in data being collected means that there is a need to build talent in the Big Data domain, said Ms Natasha K Mak-Levrion, Founder and Managing Director of PPEARL Consulting, who was also a panel speaker.

She said that the (re)insurance industry will be looking out for computational thinking skills to make meaning of such vast amounts of data efficiently, with a view to shift “from insight to foresight”. The workforce will also shift from a mainly transactional nature to advisory functions, where the opportunities will be much greater.

“Providing solutions, not just products, will be the key differentiator,” she said. She added that the industry needs too to look at the needs of the millennial generation, including their need for speed and work-life balance.

Other speakers including Mr Marc Haushofer, Chairman of Singapore Reinsurers’ Association, held the view that the industry needed to diversify not just by recruiting young people, but also those who are not too close to the business of insurance.

“They should ask questions that we as insiders, would not. It’s really important that we learn to reduce the tradition of hierarchy, and bring in people who will challenge us,” he said.

Role of intermediaries and new trusted partnerships

As an insurance insider on the panel, Mr Paul Mang, Global CEO of Analytics at Aon, shared Ms Levrion’s view that advisory would rise, and that would apply to brokers too. Going forward, they would play the role of trusted advisors structuring solutions, not just making placements.

Still, this would build upon their traditional role of bringing together capital and exposure, which would still exist. He added that emerging risks are complicated and may require new partnerships to be formed among insurers.

New client expectations and mindsets

As urbanisation and development progress, Mr Mang said that the concepts of not just risks, but also volatility are changing, and so are people’s expectations of what is tolerable to them.

Margins of error are narrowing, while people also expect to live healthy and productive lives well into their 60s and 70s. The nature of interconnectedness has also led to new complexities and the need for analytics and new capabilities to address them.

Mr Kesselman cited the example of Uber, which had found it challenging to find an insurance industry player willing to offer a solution adapted to its business model until it finally found a partner in Aon. He said that the (re)insurance industry needs to change its mindset. It should not just look into selling products off-the-shelf, but should enter into partnerships and new collaborations in order to address new emerging fundamental risks.

He noted, however, that there will be an optimisation phase first in the coming years where manual processes would take time to move to digital ones, so that the efficiencies that the industry has to offer could be ‘unlocked’ as the sector makes a significant ”step change” to such an era.

The panel discussion was moderated by Mr Peter Hacker.

The three-day 14th SIRC ended yesterday. With the SIRC turned into an annual event from this year and next taking place from 30 October - 1 November 2018, the East Asian Insurance Congress will be held in Manila from 6–9 May 2018 instead of its customary calendar slot late in the year.

 

 

SIRC in a nutshell

Already miss the buzz and vibe of SIRC? Missed out on the biggest reinsurance event of the year? Check out the highlights of #14SIRC and we’ll see you again soon.

 

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