Thiruvananthapuram: With the insurance industry assuming greater significance each passing day, insurance will soon become one of the instruments that can reduce poverty in our country, says Alice G Vaidyan, Chairman-cum-Managing Director, General Insurance Corporation of India (GIC Re).
“For very long, the focus has been on the cost of doing something... I think it is time for us to determine the cost of not doing something. I believe that an increase in productivity and efficiency of humans is a natural consequence of financial protection and it is high time Indians had the same amount of social security as their counterparts in developed economies,” says Vaidyan, who hails from Mavelikkara. Last year, Fortune India had announced her as the ‘Seventh Most Powerful Woman in Business’.
Helped primarily by a conscious government push in the manufacturing, infrastructure and agricultural sectors, India has seen a GDP growth of over seven per cent. This together with the rising affluence have translated into huge dividends for the insurance industry as well. With the National Health Policy Scheme (NHPS), the recent Budget has given a major boost to the insurance industry, In India, the States generally do not provide insurance.
“I am committed to the goal of a fully-insured and pensioned society in India, so that our citizens will have financial independence,” said Alice who was recently in Kochi. “As insurers, we are eagerly waiting to see the success of NHPS that is expected to benefit more than 50 million people in the country,” said the top offical who is also the first woman to head GIC Re – one of the oldest and largest reinsurers in the country. In fact, insurers have observed that the gap between economic losses and insured losses in India is about 90 per cent when we have a catastrophe, against the global 70 per cent.
However, the situation is expected to improve as the gross premium income of the general insurance segment grew by a whopping 32 per cent in 2017. Globally, India is the 10th largest life insurance market and 15th largest general insurance market.
The top insurer also hailed creative innovation, or disruption as “truly changing the game.” As a matter of fact, Indian insurers are gearing up to ride on the wave of Blockchain technology. Shedding light on how disruptive technologies can result in a macro change she said, “One thing is for sure, despite the ever presence of change, technology catches many of us – people, governments and companies – off guard from time to time. Perhaps that is why digital technologies have already indisputably changed the way consumers approach financial services,”
According to her, the insurance industry will have to work harder to understand how insurance syncs with people’s changing attitude and ways of accessing information. “It is likely that digital companies may consider entering our industry in the coming years. That means, we might see the entry of non-traditional insurers like Google or Amazon in the sector. These players could potentially tap large customer bases and benefit from the information they already own,” she said.
“Technology is now replacing skilled people, which is a phenomenon termed ‘technological unemployment.’ However, there is still a long way to go to achieve full digitisation,” she added. Although possibilities are unlimited, Alice also cautioned how western business interests and digital payment infrastructures are concentrating in a few hands.
Insurance fraud indeed calls for cooperation among insurance companies. This may be through the development of common agencies that build databases about suspicious claims and spread awareness. “Databases may help mitigate the inefficiency associated with adverse selection. That is why insurers are unable to distinguish potential criminals from honest policyholders,” said Vaidyan.