GIC Re


INDIAN REINSURER; GLOBAL FOOTPRINT


As the Indian insurance market grows and strengthens and features increasingly on the agenda


of global businesses, Intelligent Insurer spoke to Ashok Kumar Roy, chairman and managing director at the General Insurance Corporation Re, about his past and his company’s future.


GIVEN THAT YOU TRAINED AS AN ENGINEER, WHAT ATTRACTED YOU TO THE INSURANCE/REINSURANCE SECTOR AND GIC OF INDIA?


In 1978, when I completed my engineering programme from the Indian Institute of Technology at Kharagpur, the Indian economy was still focused on manufacturing and other more traditional industries. Information technology, financial services, medical tourism and business process outsourcing were not even heard of in those days.


The insurance industry in India had been nationalised a couple of years


earlier and, along with banking, was considered to be a sunrise industry, providing the main employment opportunities for youngsters. The insurance industry was preparing to meet the challenges of the future and provided great opportunities for engineers in the field of underwriting and risk management, particularly in the property business.


2011 WAS A BAD YEAR FOR ALL REINSURERS. WHAT LESSONS DO YOU THINK THE INDUSTRY NEEDS TO LEARN?


In terms of lessons learned, I believe that in the good times we became complacent, ignoring certain ominous signals when we should have acted in time. We are now paying the price for that complacency.


We need to become more competent and disciplined at our core skill—


the underwriting of risks. Risk modelling is also undergoing tremendous improvements, but it can be only as good as the data we use to generate the modelling results.


The insurance industry, especially in the emerging markets, generates


a lot of data but how much of it is transparent and suitable to be used is questionable. We will have to work a lot on this aspect.


GIC RE HAS EXPANDED INTO THE INTERNATIONAL MARKETS WITH OFFICES IN LONDON, MOSCOW, DUBAI AND MALAYSIA. DO YOU HAVE ANY PLANS TO OPEN MORE OFFICES OVERSEAS?


A reinsurer cannot remain confined within its domestic constituency


alone. India has a vast potential to increase insurance penetration yet we can’t be content remaining within our shores. GIC Re is called the ‘Indian reinsurer with a global footprint’. Our next ports of call should be South Africa and Brazil. In Brazil we already enjoy the status of an ‘Eventual Reinsurer’ and would like to get upgraded to ‘Admitted Reinsurer’ at the earliest.


48 | INTELLIGENT INSURER | Spring 2012 Presently, our priorities are getting more premiums from the Middle


East, Africa, Europe and south east Asia. Around 25 percent of our business comes from Dubai and west Asia. We also have strategic investments in companies in Africa and the Far East, and we are always looking for new prospects.


Today, we write more than 40 percent of our total business from


overseas. While we plan to improve upon this we also will consolidate our domestic constituency. Our vision is to be among the top five global reinsurers by 2025.


CAN YOU UPDATE US ON THE INDIAN INSURANCE MARKET? IT’S VERY COMPETITIVE AND GROWING RAPIDLY. WHAT IS GIC RE’S STRATEGY?


India has a vast potential to develop its insurance sector further. It is still


a virgin landscape. However, we need to fine-tune our efforts to suit the specific requirements of the Indian society. The heterogeneous nature of Indian society precludes the possibility of a ‘one size fits all feet’ policy.


To cater for the different strata you need different business models,


different products and different distribution channels. This provides a huge opportunity for insurers and the competition it creates is good, both for the customer and for insurers. Today, Indian customers have a choice of a variety of products in the life and non-life markets.


The Indian insurance industry has enjoyed a compound annual growth


rate (CAGR) of more than 15 percent since 2002, when the market was liberalised. In the current year, 2011-12, the industry has already has clocked over 25 percent growth. The industry growth is spurred by motor and health portfolios. Micro-insurance is another area that is slowly gaining ground. On the whole it is a very optimistic picture that we have.


As far as GIC Re is concerned, our strategy is to support, streamline,


stabilise and strengthen the Indian insurance industry. I am happy to say that we are doing that reasonably well. Post-detariffication in 2007, when there was virtual bloodshed in the non-life market, GIC Re stepped in to bring discipline. We rationalised rates and terms and conditions wherever possible, to bring market correction. We introduced additional clauses in treaties, such the coinsurance clause, exclusion of domestic facultative inward, and many more in treaties led by GIC Re. For large risks, GIC Re tries to drive the price and terms..


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