Reliance General Insurance, Anil Ambani-led Reliance Group's general insurance arm, believes it has a mandate to honour – one of effective customer engagement by making people aware about their needs and requirements in terms of insurance cover. This, it thinks, is its formula for success and a step towards social responsibility. CEO Rakesh Jain, in an exclusive interaction with Aswathy Varughese, outlines the challenges and opportunities faced by the industry, and talks about how best to go about them.
Do you see a shift in focus for the general insurance industry, and how?
This is an emerging environment within which companies have started framing individual strategies.
Since the opening up of the sector, a lot has changed. For the first 7-8 years, almost all players were moving in the same direction in terms of products, services and prices. Then, with the price freedom in 2008, the premiums started falling. It fell for almost 4 years till it reached the lowest ebb where there was virtually nothing left to lose. In conjunction with the provisioning requirements for motor pool, every company had to suffer significant underwriting losses. This created the need to differentiate the commoditised business approach and adopt a more customer-centric mindset. This is resulting in desired focus on product/service innovations and effective customer/channel engagements.
Many general insurance players are coming up with a variety of add-on covers and top-up plans. Do you think there are takers for these kinds of covers?
...Additional covers, on an average, are 10-15% of the base premium, but influence significantly in the buying process. One cannot simply hike premiums because the portfolios are bleeding. Insurers should create appropriate value proposition for customers.
You feel customer awareness is the key to success and not products?
Yes, absolutely. There is no point in just coming out with different products. Off-take will depend on customer awareness. That's the reason many good products from companies don't sell enough. Many a time, spread of awareness is impacted by the lack of training to intermediaries or third party distributors who then fail to communicate further to customers.
Any targets for market share?
We are fortunate to be in a market which would need many years of sustained growth like 20% for 20 years to catch up with the present levels of penetration in the US or many European countries.
There is reasonable opportunity for companies to create their own approach and business models. We are also growing around 20% and have a lot of learning from our past to build a good model of growth with profitability.
How do you evaluate pricing in the retail health space?
...It would be appropriate to adjust the base price of insurance to cover the inflationary impact at intervals. From the customer's point of view, it's essential to understand the nuances that go behind the pricing of a product by a company. However, they now have the right to move to any other company under the portability mechanism. It's advisable they compare the product features before they opt to move.
How are you making your distribution channels productive?
We believe agents play a very critical role in achievement of this objective. We have accordingly invested and doubled our agent base... We are training and equipping our agents to handle technology. Technology is an embedded operating objective and it is no longer a choice in our company.
DNA India, Monday, Feb 11, 2013