A recent survey by the world’s leading reinsurer, Swiss Re, revealed that 65% of individuals in India are keen on buying insurance products using online channels after the breakout of the Covid-19 pandemic. Hadi Riachi, market head India at Swiss Re, in an interview with Mint shared what he considers are the silver linings of the pandemic as well his views on the rise in premium rates and the next growth drivers for the insurance industry. Edited excerpts:
The year 2020 was a difficult one for the insurance sector. How did you navigate it?
2020 was an unusual year, particularly for the insurance industry. It brought its fair share of challenges but also presented opportunities. When I think of India, it has created an impetus to act on some of the pressing issues that our industry has been looking to address—digitalization being one of them. At Swiss Re, we were well prepared for the pandemic.
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We have always recognized and flagged pandemic to be an important risk for our industry, and over the last 100 years, have built a pandemic model, which estimates the impact on our industry as well as the economy overall. We had the model in place, and we tried to understand the impact of the pandemic and shared as much as possible with our clients.
We looked at our global underwriting guidelines for Covid-19, and we translated those in India, particularly, to reflect the extended lockdown that the country experienced, which hampered people’s ability to visit hospitals. We had to adapt our underwriting and allow for the rise in telemedical underwriting.
Major silver lines of the pandemic have been increased awareness around insurance and digitalization.
The rising mortality rate drove term insurance premiums upwards in 2020. Do you see another round of hikes this year?
The impact of mortality is an evolving landscape. The consumers’ understanding of insurance in India is also evolving with the varying distribution scenario and the new products being introduced. Everyone is still trying to understand the impact of pandemic not just on mortality, but across the board on wider insurance products and the entire landscape. What’s really important as an industry is to recognize the need to regularly review and adjust the pricing strategy across all portfolios, including mortality and reflect the changing conditions such as the increased consumer awareness as well as new consumers that are coming to market and what risks they bring with them.
At this point, it would be difficult to say with certainty whether insurance premiums will rise or not, but it is our guidance to our industry that we need to continue to closely monitor and review pricing to make sure that it is sustainable for the industry and allow us to remain a long-term protection partner for the market.
Respondents in your survey showed strong concerns around complex product terms. What can insurers do to make policies simpler?
What attracts any person using online medium when purchasing a product are simplicity and the convenience of doing business online. That’s the consumer’s expectation. If you put this in the context of insurance, it’s important that we replicate that sentiment. There is really a need for simplified insurance products and well a friendly customer journey, which starts with buying the product until the claim settlement as well as the renewal stage.
What will be the next growth drivers in the insurance sector?
A challenging year could drive a sense of urgency and accelerate the adoption of digitalization, and hopefully, this is the start of a journey in our industry. This will motivate us to continue to innovate and improve overall product offerings. This would also be driven by increasing consumer demand, as they will be increasingly expecting from us a more efficient and personalized experience.
Eventually, as we move forward, it will be really interesting for our industry to reflect on how we can incorporate lifestyle risk factors into health assessment and how we can bring in more automation. These would be two major innovation areas moving forward.
On incorporating lifestyle risk factors, I think of increased adoption of wearables and health apps on our phones. There is an increase in the availability of consumers’ health and lifestyle data on these devices, and the industry should be able to better engage with consumers using this data to provide more holistic and personalized experiences.