Focusing on non-motor, non-health space: Future Generali India Insurance MD

"There is a need to invest more in distribution, products, and marketing", said Rau

The general insurance industry in Q1 has reported good growth, aided by the group health and motor segments. But retail health seems to have slowed owing to the base effect. Anup Rau, managing director and chief executive officer of Future Generali India Insurance, speaks to Subrata Panda of the emerging trends, impact of inflation, and prospects of the motor business. Edited excerpts:

How was Q1 for the company?

We grew by about 25 per cent in this period. The general insurance industry in the past 20 years has seen consistent growth. The industry will grow 2.5-3 times GDP growth.

Health has somewhat slowed. Which segment is driving growth?

Motor has recovered strongly on account of vehicle sales picking up. One of the reasons why the health segment showed disproportionately high growth during the pandemic was that there were no motor sales and/or usage happening, not just because there was greater appreciation for the health business. Distribution focus matters. So, a bit of a slowdown in retail health now is bound to happen but the long-term trends continue to be encouraging and healthy.

Is there a need to invest more in distribution?

There is a need to invest more in distribution, products, and marketing. Our products have to be richer and customised; they are largely commoditised at the moment. Distribution needs to be leveraged better to meet a broader spectrum of a customer’s requirements, and should not be restricted to just, say, motor or a small range of products.

There is a proposal that life insurers should be allowed to offer health indemnity products. What will be the impact on non-life insurers if this happens?

I cannot make an argument that we should put a constraint on distribution. Some life companies sold health indemnity policies in the past and their retention has been low. I think life companies are perhaps not used to dealing with a product that is claim- and service-intensive. One needs to be mindful of that and make sure that customer service is not compromised.

Have you increased premiums on your health offers?

If the demand goes up, the real price comes down in the long run. Premiums are a function of various costs, the most significant being claims. When Covid was raging, hospitals increased prices of procedures across the board. And these rate increases have been sticky. The treatment or hospitalisation price correction has not happened; the insurers must increase rates commensurately.

Of late we have not increased premiums on our health offers. We are launching a product shortly where the extent of coverage and features is superior and is priced accordingly.

Do you think motor will again become the largest business for general insurers?

In the long term, the share of motor insurance in the overall business will keep going down. As markets and customers mature, demand for non-motor products will go up. Travel has come back, we are seeing an uptick in household insurance, and small and medium enterprises (SMEs) are now open to more insurance. The motor segment will continue to grow but other segments will grow faster.

Which are the segments you are focusing on as a company?

We are building a strong franchise in the non-motor, non-health space. The segments are under-penetrated and there is latent demand. We are also looking at greater penetration in the SME segment. We would like households to buy products that protect the value of not just their physical assets. We plan to increase the share of non-motor, non-health in our mix, without losing focus on motor and health.

The regulator (Insurance Regulatory and Development Authority of India) has given some indicative growth targets to insurers. How feasible are those?

There is a huge market that will support higher growth. The regulator wants to increase the penetration from around 1 per cent to 2.5 per cent as against the global average of 4 per cent. It is possible to grow faster. The only constraint could be shareholders’ ability to meet the growth capital requirements.

Generali is now the majority shareholder. What are the changes it has brought in?

We have been independent; we have been and will continue to be a board-run company. I do not see any changes per se. But there is an opportunity to have greater collaboration with Generali and adopt its best practices. There are obvious benefits of access to the experience and the knowledge repository of a 190-year-old company with an international presence across continents. We will leverage that.