Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance, is of the opinion that penetration of general insurance is all set to get better in the coming time, in a conversation with Nirmala Konjengbam.
Life insurance is largely considered as the most important components of insurance — which is a process of transferring risk and securing yourself and family against any eventuality. But there’s a lot many useful products that fall under the ambit of insurance other than life insurance, mainly general insurance.
All the tangible assets form an important part of our life and it’s important to protect the economic value of such products. General insurance helps us do the same. Insurance contracts that do not fall under the life insurance category are branded general insurance. General insurance helps us cover for health, fire, motor accident and other non-life miscellaneous insurance schemes.
The insurance industry has witnessed a disappointing penetration rate in India. According to IRDAI’s annual report, insurance penetration (premium as percentage of GDP) stood at 3.6 per cent in 2017 from 2.21 per cent in 2001. That is an increase of mere one percentage point. The share of general insurance in the rate of 3.69 stood at a mere 0.93.
General insurers have found it tough to penetrate within the vast Indian market. However, things seem to be changing.
Excerpts from interview:
I firmly believe that one of the most important factors that influences the penetration of general insurance is awareness about this important social security tool. One statement, which has intrigued me is that, has anyone ever gotten up to buy insurance? I have asked this to many people including the ones who work in the industry. Nobody told me that they got super excited someday in the morning to buy insurance irrespective of how good the products are and their reasonable prices.
I happened to meet a psychologist one day and in the series of our conversation, he gave me an interesting response to this dilemma. He told me that human brains are not wired to see risks and that’s precisely why a person doesn’t opt for insurance even if the product and offer is good. They think that the entire world around them may collapse, but nothing will happen to them.
This perspective and attitude towards insurance is what I feel that needs to be addressed. Moreover, I feel that there’s a direct correlation between growth of the economy and penetration of insurance. People opt for insurance only after generating assets that they are worried about losing. With disposable incomes of individuals going up, insurance penetration is bound to increase. We as an economy are at the tipping point when it comes to making way for better general insurance penetration.
I feel that there are two ways through which the industry should work and we as a company have been working on to ease this challenge of perception and attitude towards insurance. Firstly, make the claim process so easy and convenient that the perception of insurers not willing to pay claim should disappear, which can bring about better understanding of insurance. Secondly, add value to your product in a way that a customer sees it as an adequate offering which provides solutions to what they are looking for. Fundamentally, if you address these two major problems, my belief is that the penetration of insurance would go up. Thus, fundamentally insurers have to look to solve customer worries.
General insurance industry along with the economy is slated to grow. The world is evolving, customer behaviour and their expectations are changing and so are the risks that they face, which are becoming more complex and sophisticated with each passing day. Technology is playing a critical role in making insurance readily available across all possible platforms. It has enabled insurers to simplify their offerings and address queries of customers instantly. My belief is that, the pace in which digitization and data creation is happening, new business models will evolve which will better the customer experience and provide solutions which could not be thought of earlier. These are very exciting times and I’m happy to be a part of it and see how it unfolds.