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Experts Dissect Core issues Facing Insurance Sector at FINCON 2018
Jan 19, 2018
Mumbai, 19 January 2018: FINCON 2018, FICCI's annual insurance conference that got underway here today became the hub of intense discussion about the future of the insurance sector in India. Organised by Federation of Indian Chambers of Commerce and Industry (FICCI), the event included panel discussions that analysed various issues concerning the industry.
At a session on 'Value Management in a Post Listing World', a panel comprising Mr. Arijit Basu, Managing Director and CEO, SBI Life Insurance Co Ltd; Mr. Aashish Agarwal, Executive Director, CLSA; Mr. G Murlidhar, Managing Director, Kotak Mahindra Life Insurance Co Ltd; Mr. Rajesh Sud, Vice Chairman and Managing Director, Max Life Insurance Co Ltd; Mr. Sachin Wagle, Managing Director and Head of India Financials and India Capital Markets, Morgan Stanley; and Mr. Sakate Khaitan, Senior Partner, Khaitan Legal Associates discussed the implications of the listing of insurance companies. The panel discussion was moderated by Mr. Alpesh Shah, Senior Partner and Director, The Boston Consulting Group.
Mr Shah commenced the discussion by describing insurance as a very significant sector in India. "About seven to eight of the top hundred companies in terms of market cap in India are already insurance companies." He predicted that with more companies getting listed, insurance will be one of the top five industry sectors in the country. And the implication of this is that it is no longer enough to be a good company, they also have to be good stock.
Coming from a recently listed company, Mr Basu discussed the need to cover all aspects. "For me, the way to address the expectations of investors is performance versus promise." Investors come in based on promises made to them, he explained. If the company delivers on those promises, investor confidence will grow, and that will set the company apart.
Mr Sud agreed with Mr Basu. Insurance, he felt, is ahead of other markets, with significant head room for growth. "We are in a sweet spot," he declared, highlighting the well regulated market, with the fundamentals of growth intact. "Projection of 15 per cent growth over a 10-15 year time frame is not audacious." He was of the opinion that insurance is reaching scale as an industry, and even incremental revenues are contributing to the bottom line. India as a whole can offer a large opportunity to the insurance sector in multiple formats.
Mr Agarwal provided a non-insurer's point of view. Most investors look at Indian companies for their growth potential. Global investors, he said, highly value the quality of management, which is very good in India. In addition, the regulator enjoys very high credibility. Hence, he was very optimistic about the future of the insurance industry. While the Indian financial sector leads global benchmarks in technological innovation, the biggest challenge is the high cost of distribution. If this can be brought down, there will be more scope to deliver unit linked insurance products.
Mr Wagle observed that investors have a strong belief that market share is polarised towards the leaders. Hence the strong companies will grow faster. They are impressed by Indian companies "millennial boom, and the entire fast forwarding of the fintech journey." He, like the others, agreed that Indian companies are positively positioned. He called for a rethink in the way capital can be generated from small investors.
"As confidence increases, savings will increase, so the environment will offer opportunities," was Mr Murlidhar's view. "I think India can deliver on this expectation. Transparency will bring better performance." He felt that savers need to move towards becoming investors.
But Mr Khaitan preferred to look at the risk. "Today there is one company in the entire industry that is making underwriting profit. Others are profitable because of investment performance." He explained that investment performance is driven by fixed investment, where interest rates are falling. He did not concur with the bullishness of his co-panellists.
Another panel discussion dealt with 'Digitisation of Core Operations." This discussion, moderated by Mr Jitesh Shah, Partner, The Boston Consulting Group, discussed how global insurers are increasingly leveraging recent technological developments for business models, and whether Indian companies are up to speed. The panellists included Mr Ashish Kumar Srivastava, Managing Director & CEO, PNB Metlife Insurance Co Ltd; Mr K G Krishnamoorthy Rao, Managing Director and Chief Executive Officer, Future Generali India Insurance Co Ltd; Mr Neelesh Garg, Managing Director and CEO, Tata AIG General Insurance Co Ltd; Mr Pushan Mahapatra, Managing Director and CEO, SBI General Insurance Co Ltd; Mr Rahul Kanodia, Vice Chairman & CEO, Datamatics Global Services Ltd; and Mr Roopam Asthana, Chief Executive Officer and Whole Time Director, Liberty Videocon General Insurance Co Ltd.
For details related to different sessions of FINCON 2018, photos, videos and the BCG-FICCI presentation please refer to @ficci_india on Twitter, http://YouTube.com/ficciindia, www.ficci.in, https://www.facebook.com/ficciindia
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