‘20 years on, health insurance still an opportunity’

Mumbai: This month marks two decades since HDFC Life and ICICI Prudential sold the first life insurance policy by a private company. Soon after, private non-life companies also kicked off operations. TOI spoke to four CEOs who launched the startups at that time to get their views on what had they set out to do and whether the industry is where they expected it to be...

Three-four of the premises we started with evolved as expected — the move away from traditional endowment to new products, diversifying from agency channel, having more professional agents, and technology being the front-runner for servicing. One big positive, which was not on the agenda at that time, was how much talent India has contributed to the rest of the world. So many global roles are now being managed by those who grew up in the new Indian insurance industry. More than a dozen CXOs have been spawned by ICICI Prudential. The surprise to me is how strong LIC has remained and retained market share. I think what has helped LIC be resilient is the trust factor, the agency force and its products, particularly the ability to provide guaranteed returns. In future, I think there is a lot more scope for pension solutions and long-term health. A separate regulator for savings and annuities has complicated matters. Globally, money that has been coming in has been pension money. So, whether it is from funding or retirement planning perspective, these are the two markets close to insurance that have a lot of tailwind.

— Shikha Sharma | Founding MD, ICICI Prudential Life

As we were the first private life insurance company, we had only one data point and, with my engineering training, I am unable to draw a trend line without multiple data points. I had no idea how big the industry would be. All we wanted was to be the most respected company as, with trust, financial success was guaranteed. Many companies came up with the plan to sell out to their foreign partner, but HDFC was not in that game. We are now seeing consolidation. I am happy that the focus is significantly more on life protection. Fortunately, now the chase for scale to build up valuations is not there. It was unfortunate that the first Irdai chief N Rangachary lost the fight with the government for financial independence. One could have argued that more product innovations could be allowed. But there was a shortage of actuaries and Irdai would not have been able to pay the same as industry. You can’t fast-forward any change as everything will happen at its pace.

— Deepak Satwalekar | Founding MD, HDFC Life

I had assumed the industry would grow 100% for the first 10 years, which did not happen because household insurance never took off. I had expected some of the big corporate names to be our biggest competitors, but insurance did not occupy the mindshare of corporate owners. At the same time, many foreign insurers were controlling products from head office and they could not grow. Allianz, being a decentralised organisation, we could do more and found ourselves at number one. What surprised was the depth of talent that was already there in the public sector and all that was needed was to harness it, give it focus and the right incentives. There has been a big increase in customer awareness of policies and renewal of even two-wheelers has improved thanks to digital. Overall deregulation has been positive as de-tariffing brought down the price of fire insurance and removed the cross-subsidy. Householders, SME and even health continue to remain opportunities even after 20 years.

— Sam Ghosh | Founding MD, Bajaj Allianz General

The evolution of non-life has been along expected lines. I had expected the first decade to be the startup years, and the next to start seeing consolidation. What has surprised me was that even after two decades we have not developed savings-linked health insurance products, which would have taken care of out-of-pocket costs in healthcare. We also do not have an acceptable healthcare cost index, which is essential for the development of the industry. I also feel that the pace of digitisation in the non-life industry has been as high as the banking industry.

— Antony Jacob | Founding MD, Royal Sundaram Alliance