Confidence, relevance and cost --Lloyd's Carnegie-Brown

Lloyd's chairman Bruce Carnegie-Brown set the India Rendezvous 2020 abuzz yesterday in his keynote address during which he asked, "Why don't they buy more?"

He was referring to why consumers don't buy more insurance. He began his address by acknowledging, “The future of the sector in India is surely very promising,” before looking at some of the challenges facing the industry.

“Our customers are not buying enough of our products,” he said, pointing to the $27bn insurance gap in India. He pointed to the three main impediments to growth: confidence, relevance and cost.

Addressing relevance, Mr Carnegie-Brown said that the insurance industry should be using data and data analytics to design products that are more closely related to customers’ needs and more relevant for them—while the issue of confidence could be easily addressed. He said, “We need to be better at promoting insurance.” Products are also too expensive and this is because acquisition costs and administration costs are too high; the industry needs to modernise its systems and use technology like drones and blockchain to improve performance.

“It is imperative to have an innovative culture within the organisation,” he said and indicated that this was the thinking behind the Future at Lloyd’s initiative. “We must make it easier for new capital to enter the market. Third party capital now makes up 16% of reinsurance capital,” he said, but the gravest threat to this growth is protectionist government initiatives— which is why Lloyd’s has taken it upon itself to work closely with governments around the world—including in India.

Mr Carnegie-Brown ended his address by highlighting the emerging risks of climate change, data and data analytics, and looked at what part the industry should play in the transition to a low-carbon world. “It will be a hard transition. Insurers who embrace innovation will be the best placed to thrive,” he said. “Risk will continue to be commoditised and the best way to predict the future is to create it.”

Some of the same themes were also evident in other high-octane speeches at the conference. “We are the first generation to have felt the impact of climate change and we may be the last generation that is in a position to do something about it.” This was the stark message delivered by GIC Re chairman-cum-managing director Devesh Srivastava in his welcome address.

SCOR CEO of reinsurance Michel Blanc outlined a new insurance model for India and how it might drive P&C reinsurance offers over the next five years. The main forces shaping India P&C reinsurance models, he said, are regulatory changes (like risk-based capital and IFRS17), market changes, government schemes and big loss events (such as the Chennai floods).

The India Rendezvous continues today at the Taj Lands End in Mumbai, organised by Asia Insurance Review and co-organised by GIC Re. It is sponsored by New India Assurance, ACE Insurance Brokers, Moody’s Investors Services and SCOR.

Source: Asia Insurance review