ICICI Lombard aims to be a tech company that does insurance

ICICI Lombard NSE -1.05 % is the winner in the Emerging Company of the Year categoryof the ET Awards for Corporate Excellence for 2020. In an interview with Ashwin Manikandan and MC Govardhana Rangan, its chief executive Bhargav Dasgupta discusses ICICI Lombard’s core strengths that enhanced the private insurer’s winnability in a highly competitive setting. Edited excerpts:

ICICI Lombard has become the largest private sector general insurer. What were the principles and philosophy on which you built this institution?

There are five foundational pillars. First and foremost is customer trust. Insurance is a promise to pay when you’re in difficulty, and at times, this promise is not in your premises; it can be in a hospital or garage. Building trust assumes a very important part of what we do, especially in claim servicing. The second pillar is the resilience of leadership and not just in terms of maintaining a topline or profitability, but also in sustenance. Third, is a sharp focus on technology-led innovation. We think of ourselves as a tech company that also does insurance — I don’t think we are there, but that’s the mindset and agenda. Fourth is risk management and capital preservation. Transparency comes when you’re confident about your risk management. Fifth, and finally, we promote entrepreneurship, ownership and empowerment within our team.

Businesses with state backing have inherent advantages. How did you handle the challenge?

Initially, the focus was on relationship management and building trust. Then immediately after that is claims experience. One thing we explained to our corporate clients is that a claim paid in one month is much more valuable than a claim paid in nine months. Moreover, for our corporate clients, we don’t just want to be a risk transfer company. Wherever we have to take judgement calls on claims we use tech and analytics to give deeper insights on how the same risks can be reduced in the future. Moving beyond simple risk transfer to risk reduction for our corporate partners has always been an integral part of our operations.

For ICICI Lombard, a lot happened in 2020. It was the year of the pandemic. You also acquired Bharti Axa GI in the midst of the lockdown. How do you look back on them now?

It was a challenging year for everyone as no one was prepared. Even for disaster recovery and business continuity protocols…. you don’t expect the backup sites to be locked up as well.

A few weeks before the lockdown, we saw it coming and every day we were on war footing preparing for work from home protocols. I feel from June onwards, we started looking at it as a transformative opportunity. We decided in May, even when the pandemic goes away, we’ll be a flexible working organisation. We also felt it was a good time to look at growing inorganically and went ahead with the acquisition of Bharti Axa. It was interesting because it happened completely virtual.

You have won the ET Award in the Emerging Company category. What does it tell you about the prospects for the industry and your firm?

Insurance density in India is about one-tenth of China and the penetration to GDP less than half. We are not even looking at the West — those numbers are out of the park. Even in relative comparison with BRICS countries, we have a long way to go. Studies show that when the per capita income of a country reaches $2,000 the insurance penetration takes on a hockey-step curve. I feel the industry will grow in the high teens over the next decade — almost 2 to 2.5 times the GDP growth. If GDP growth is more than 8%, we’ll see even more robust growth. The bigger opportunity is to transform the risk management mindset of the country.

What were the biggest challenges you faced in building ICICI Lombard to this scale?

The challenges change with time. I came to this company in 2009 right after the financial crisis. The industry was much smaller and way more competitive. When the prices dropped due to de-tariffication, there were challenges in calibrating. One of the things we did was redraft our vision document. We floated it across the organisation for a collective vision. We focused on analytics, claims management and risk reduction. Circumstances have changed over the years. I think the biggest thing is for organisations to stay closer to the ground and retain humility — especially when you are growing bigger.

Insurance in some ways is more strictly regulated than banking. How do you navigate through regulatory prudence and deliver returns to the shareholders?

While that is true, another fact is also that the Insurance Regulatory and Development Authority of India, within the bounds of the Insurance Act, always focused on development. In fact, IRDA has the D for Development as its core agenda, unlike most regulators. Some of the changes that have happened in terms of product innovation and grievance redressals have been quite unique. The regulator is open-minded as we have found out in all our engagements over the years.

Who and which companies are your role models from leadership and institutional points of view?

We were lucky to join the ICICI Group in the 90s. We had some outstanding leaders to look up to. As Newton said — “I have seen further. It is by standing on the shoulders of giants.” Within ICICI Group, we had ample role models. When it comes to companies within the insurance sector, globally, there are some fantastic organisations — Discovery in South Africa, Ping An in China, Progressive in the US, and among startups, Lemonade are some fantastic companies to look up and learn from. We don’t want to copy anyone. But we will look to learn from them and apply those in the Indian context.

How does a strong insurance sector play a role in nation-building?

At a traditional level, if you think about a world without insurance, there will be less appetite for risks. The genesis of insurance in the modern context can be traced to the fear of sending goods out in the ships beyond a certain capacity in the 1700s. People at Edward Lloyd Coffee House came up with the idea that they would write the name of the trade and share 10% of the risk, and that’s how the word ‘underwriting’ came about. Insurance allows you to be entrepreneurial and that’s one of its roles in shaping society. The long-term savings and capital pool from the country can be used for important developmental and infrastructure projects. Increasingly, people are becoming more aware and as penetration goes up, it’ll play a more vital role in nation-building.

How do you keep institutions strong and ensure growth, without failure?

What I wouldn't want to see in myself or my successor would be arrogance. That's the start of the downfall. You have to remain curious, grounded and open-minded: Arrogance comes in the way of all of that.

Source: The Economic Times