Composite licence can provide customers with comprehensive insurance options

https://indianexpress.com/article/business/banking-and-finance/composite-licence-can-provide-customers-with-ample-insurance-options-9053163

Sumit Rai, MD & CEO, Edelweiss Tokio Life Insurance, says the pending Insurance Bill will improve customer confidence in the sector and facilitate the ease of doing business. In a conversation with GEORGE MATHEW, Rai says the composite licence will provide customers with comprehensive insurance options and they stand to benefit by having the convenience of obtaining various insurance coverages, like health and life, from a single insurer.
 

1. What’s your view on the proposed Insurance Bill 2023 pending in the parliament? What will be its impact on the industry?

The proposed bill is quite ambitious in its scope and will significantly modernise the legal framework governing the sector. Overall, I see 2 themes emerging from the proposals made under this Bill – improving customer confidence in the sector and facilitating ease of business. For instance, they have proposed the introduction of composite insurance licenses, which will open doors for diversification and gives businesses, the ability to offer a comprehensive product offering to the customer. Similarly, the Bill will relook at the capital requirements based on size and type of business… which might make entry of newer players easier and make the industry a more competitive landscape.

It will go a long way in streamlining investment regulations, which will contribute to strengthening financial position of companies, especially the relatively younger businesses, and expand their capability to improve their operations. Additionally simplifying intermediary registration can enhance the efficiency of insurance distribution, benefiting both intermediaries and consumers.

2. What’s your view on composite insurance licenses? Will you consider entering the health insurance segment?

The proposed regulation on composite insurance licensing can offer a streamlined approach to enhance operational efficiency, promote innovation, and provide customers with comprehensive insurance options. The integration of data from life and health insurance customers can improve underwriting processes, and therefore risk management. Customers also stand to benefit by having the convenience of obtaining various insurance coverages from a single insurer. This presents an exciting opportunity for fostering innovation and expanding the insurance market. The future appears promising for the insurance sector in India… we will certainly assess this opportunity (to enter the health segment) once the guidelines ahead become clear.

3. IRDAI has allowed insurance companies to launch individual and group ULIPs and combi plans — a combination of life and health insurance plans — without seeking prior approval from the regulator. The proposal doesn’t seem to have taken off. What’s your view?

I don’t think it’s fair to say the proposal has not taken off. We have seen over 10 ULIP products, and funds being introduced in the market since this regulation was announced. So, the industry has responded to the regulation to a certain extent. Overall, the primary goal of this regulation is to improve customers’ access to relevant insurance solutions and quicken speed to market, and that goal is certainly being achieved. Immediate implementation or effect of regulation in the sector is not the best benchmark of its success. The idea behind all these changes is creating a stronger ecosystem for the industry to effectively interact with the customers.
 

4. IRDAI plans to onboard Health Claims Exchange and Bima Sugam. What’re your expectations from these plans?

It’s clear that the regulator’s vision of ‘Insurance for All by 2047’ is driving progressive measures to enhance access to insurance and improve the customer experience. At the core of both these initiatives is the regulator’s intent to create an infrastructure that protects the policyholders’ interests and improves the end-to-end servicing experience to the customer.
 

Platforms like Claim Exchange and Bima Sugam can help customers understand products more easily and in an unbiased fashion, helping them make well-informed decisions. I expect in the long term, these platforms will raise awareness about insurance and significantly enhance the overall customer experience in the industry, similar to the transformative impact that UPI has had on payments in India. 

5. Do you expect life insurance premiums to move up in the current financial year? 

Life insurance premiums are primarily determined based on mortality experience and are designed with a longer-term perspective of 20-30 years. Shorter-term expectations, such as those within the financial year, typically do not lead to immediate changes in premium rates. To see any significant impact on these rates, there would need to be a shift in the long-term trend rather than short-term fluctuations.

Life insurance premiums are primarily determined based on mortality experience and are designed with a longer-term perspective of 20-30 years. Shorter-term expectations, such as those within the financial year, typically do not lead to immediate changes in premium rates. To see any significant impact on these rates, there would need to be a shift in the long-term trend rather than short-term fluctuations.
 

Premiums have undergone some revisions, mainly in the aftermath of COVID-19. I don’t see any significant movement happening this financial year. India’s premium rates are fairly competitive and the recent increase notwithstanding, the premium rates remain attractive.
 

6. What’s the impact of digitisation in the insurance segment? What share of business is accounted by the online segment?

I think it’s incorrect to look at online business as the only impact of digitalisation. Digitization is playing a big role in modernizing the world of insurance. Customer journeys have become intuitive, customer life cycle management has improved, risk management has become more robust, communication and support to the distributors has quickened, and the overall brand experience to the customer has become more uniform.
 

For us, productivity, and personalization have been important factors and digitization has played a critical role in facilitating both these goals. For instance, we have launched a unique need-based selling tool called U Unlimited, which has helped us train the distribution towards a more solution-oriented approach rather than a product one. Similarly, we have launched BOLT, an Insta-issuance tool, wherein automation has allowed us to quicken the entire back-end process to provide an immediate decision to the customer. Initiatives like these have had a big impact on productivity and personalization and we will keep finding such opportunities towards these goals.
 

7. Life insurance industry’s premium mobilization actually declined Y-o-Y by nearly one percent for the June quarter. Why do you think the industry stagnated during the period?

So far this year, the private industry has seen sustained growth, clocking a 13% year-on-year growth as on H1. There was a slight slowdown in Q1. However, growth has rebounded and I believe that the long-term growth trajectory in the country continues to be very strong.