Enhanced coverage, not discounts to be the norm!
30 Dec 2008
An engineer and MBA, Mr. Sandeep Bakshi joined ICICI bank in 1986. He worked in the project financing department till 2001 before joining ICICI Lombard in January 2002.
Since then Mr. Bakshi has made invaluable contribution in the growth and reach of ICICI Lombard who believes in keeping it short & simple (products) for better understanding of the customers.
“The distribution architecture, the coverage, the use of technology and the methods of buying insurance need to change for the deeper penetration and enhanced profitability,’ says Sandeep Bakshi, the Managing Director & CEO of ICICI Lombard, in a free-wheeling interview with Harsh Roongta and Bienu Vaghela of Apnainsurance.com
Now that much awaited FDI inflow has been raised from 26% to 49% in insurance which will lead to rise in capital inflow. How do you view this? How it will impact general insurance industry particularly from consumer’s perspective?
Finally it should happen. If you look at the current guidelines of the general insurance sector, they do not restrain capital requirement of the sector or the growth of the industry. The involvement of both the stake holders (Indian & foreign) is worth noticing. Moreover general insurance is not a very capital consuming industry. Now with 49% participation, recalibration of interest in equity stake holding would happen, but current 26% is also not styming or affecting the growth of the sector or the individual plans of the players. However challenges are different for life and non life insurers.
Do you think that with foreign partners bringing in 49% will it lead to acceleration of technological advancement and upto date product knowledge?
The involvement at 49% will not be remarkably different than 26%. Partners who have come at 26% have taken a larger call on the insurance sector and the opportunity the sector offers in the country. In the last couple of years we have come to know the quality of Indian as well as foreign stake holders and the capital at which they are operating. We cannot say that our growth plans were impacted as capital was a constraint.
But yes these additional funds will be deployed for large investments in technology, or unexpected loss or more value-added products. Currently Capital Adequacy Ratio (CAR) is almost 2.5 as against 1.5. Most of the general insurance players have been able to attain solvency margins. This year could be different due to de-tarrifing and other financial catastrophies. I think the capital requirement is adequate and I say this on behalf of almost all players.
Life Insurance companies are also venturing into health insurance sector. How do you perceive the competition from them besides, general insurance players? Moreover large sections of people know health insurance as Mediclaim…
Large percentage of our population is without the health cover and it is the basic need of the society. The structured benefits available to certain distinct groups, like corporate groups have harmed those which have group health benefits. Looking at the partnership between government and stake holders of insurance, we have to realize that insurance is the one part of the larger ecosystem of health. It includes government, stake holders, third party administrators and customers. So stake holders are one small but important link in the chain and to achieve desired results whole of ecosystem has to integrate.