What is Core & Satellite strategy?

To say that the Indian insurance industry has had an eventful 2023 would be an understatement. The year began with a resounding affirmation of the potential for the industry, with a global reinsurer indicating that India could become the world’s sixth largest insurance market by 2032.

FY’23 ended on a strong note for the industry with general insurance reporting close to 17% growth. Through FY’24 till date, the general insurance industry continues to report double digit numbers with all segments growing at a healthy pace. However, given the low levels of penetration 4.2% overall and close to 1% for general insurance, there is considerable scope for growth, especially in the light of the country’s mission to provide insurance for all by 2047.

Health insurance has been among the major contributors in the robust growth of general insurance over the last few years, especially in the post-pandemic era. It is symbolic of the fact that Indians are looking at health insurance as an investment in their well-being. According to a Statista survey, awareness levels are at an all-time high (96%) but only 43% Indians own a policy. Year 2023 was characterised by significant innovations in the segment including the use of Artificial Intelligence (AI) for various processes such as KYC, preliminary assessments and onboarding among other things. It is important to remember, however, that along with integrating technology to streamline processes, we also need to focus on creating affordable yet comprehensive healthcare insurance products for what the NITI Aayog called the “missing middle” – a proportion of the population that does not qualify for social welfare programs but also does not have the resources to buy private health insurance.

Motor insurance remained the second biggest contributor to general insurance in FY’24 till date and is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11.6% till 2028. Growth in auto sales and therefore in auto insurance is a measure of India’s growing ambitions and aspirations. With third-party motor insurance rates remaining unchanged, we can expect the segment to demonstrate robust growth in the upcoming year as well.

Travel remains an emerging insurance segment that has seen a comeback in the post-pandemic era. Like health insurance, while travel insurance has high levels of awareness, it does not necessarily translate to individuals buying the right kind of insurance to safeguard their journeys. Given the growing number of Indians travelling for leisure, this is a promising segment that needs focus.

Property and Crop insurance have gained momentum and will need to be priority areas. Climate change is an imminent reality that has been impacting countries across the globe. Natural calamities with severe intensities and erratic weather patterns have become more frequent, resulting in crop and property damage. While the government has taken significant steps towards both, even the regulator is innovatively upholding the inclusivity agenda through Bima Vistaar for example, a unique integrated insurance product including life, health and property coverage. Pradhan Mantri Fasal Bima Yojana – among the largest government-supported insurance programs of its kind. There is need for us as insurance sector players to direct our energies in leveraging technology to help customers seek timely support and interventions rather than having to rebuild each time. For instance, educating and empowering farmers to use technology to closely monitor changing weather and alter their crop sowing patterns is one such preventive measure.

The Insurance Regulatory Development Authority of India (IRDAI) has been working tirelessly to enable spirited competition by introducing a slew of policy measures, granting licences to new entrants and engaging in constant dialogue with the industry. Among the noteworthy measures taken by the body throughout 2023 include simplification of policy wordings; the decision on removing caps on commission being paid out to agents and placing an overall Expenses of Management (EoM) limit on companies. Efforts by the regulator for rolling out Bima Vistaar and deploying Bima Vaahaks to enhance last mile delivery also dominated 2023. It is evident that IRDAI is working round-the-clock in collaborating with the industry to introduce policies and reforms that enable us to serve customers better.

The year 2023 has been characterised by growth for the general insurance sector. It has also witnessed private and public sector players alike adopting technology across the board to optimise efficiencies while focusing on providing maximum value to customers. While awareness about insurance may have grown in the country, there is a lot of work that needs to be done to empower consumers with the knowledge to be able to choose the right kind of insurance products with adequate coverage for their unique situations. The regulator’s vision of Bima Sugam, a consolidated digital platform for customers to choose from available policies, is a step in that direction. However, considering the level of insurance penetration in our economy, significant efforts are required in the direction of educating potential customers even as we create insurance covers and schemes that are relevant to them. The next two decades are critical for us to take steady steps towards achieving the goal of insurance for all. If 2023 was any indication of how those two decades are going to look like, we are indeed looking at exciting times ahead.

(The author is Managing Director & Chief Executive Officer, Universal Sompo General Insurance Company Limited . Views are personal)