India: a land of opportunity
India remains a land of opportunity for reinsurers—but those that collaborate and innovate will benefit the most, says Devesh Srivastava, general manager of GIC Re.
What opportunities for growth does GIC see in Asia-Pacific?
We have during last couple of decades increased our global presence by way of setting up branches in London, Dubai and Kuala Lumpur. We have a subsidiary in South Africa and a liaison office in Moscow.
“Personal lines such as health and motor will continue to be the growth drivers.”
We are in the process of upgrading our operations in Moscow to a subsidiary operation and see a significant opportunity in Russia and Former Soviet Union States.
With our Lloyd’s Syndicate 1947 being operational from April 2018, we hope to improve our access to global business with good credit rating.
We see that the US is a major market and we are already writing business from there. We will be able to increase our book from there.
We will continue to be focused on increasing our market share in the Afro-Asian region while spreading our wings in the developed markets.
How would you characterise the overall health of the Indian reinsurance market?
India today is a land of opportunities, and the ambient business environment in the country is characterised by exuberance and optimism. New reinsurers entering India provide additional capacity in the Indian market and bring with them international expertise.
Cedants get access to new and innovative products. All these advantages have the potential to accelerate an increase in insurance penetration in India. Emerging countries are rebounding, and India is at the top of the scale.
The Indian non-life insurance industry maintained robust growth during FY 2018 and reported 17.5 percent increase in gross premium, while the life insurance industry registered a growth of 10.8 percent for new business premium.
The non-life insurance premium is expected to grow further in view of the increase in penetration of agriculture insurance, new government initiatives on the national health insurance scheme, the pickup in economic growth, etc. Apart from this, technology is expected to make a larger impact in the industry going forward.
The Indian insurance industry also witnessed the listing of three insurance companies during 2017/18. More players are expected to approach the capital market in the near future. This is expected to improve the corporate governance standards of the industry and set new benchmarks for transparency.
Indian insurance growth will continue to present an opportunity to reinsurers and there is room for new players. As the Indian middle class grows and India moves towards being a middle-income country in the long term, slowly and surely Indian insurance penetration will grow, providing a sizable opportunity for the reinsurance sector.
Where does GIC Re fit into this in terms of market share?
In the Indian non-life market which is the 15th largest global market, GIC Re has about 55 percent market share for FY 2017.
It increased to about 65 percent for 2017/18. For FY 2018, GIC Re achieved 24.5 percent growth in written premium and that apparently has helped it scale two ranks in the global ranking list from 12th to 10th position. GIC Re is hopeful of maintaining its leadership position in the market.
Has competition increased since more overseas companies were awarded licences? Do you expect growth in this market?
We certainly do not see any competitive disadvantage from foreign reinsurers opening branches in India. It is too early for new players to assume an aggressive stance. They will settle down in the market and put their infrastructure in place in the near term.
The whole ecosystem is poised to develop, and we will be alive to any kind of new setups. We also expect more seriousness and collaborations in the reinsurance industry to ensure that pricing will be at a healthier level. GIC Re is now getting ready, we are increasing our capacity and we are also reaching out to more products.
With government aiming at providing insurance protection to farmers and bringing more cultivated land under insurance, the growth will continue to be robust.
Recent initiatives include National Health Protection Mission—Modicare—which proposes to cover 550 million people, about 40 percent of the Indian population. With government emphasis on sustainability and welfare together with better targeting of subsidies and welfare measures, efforts at financial inclusion will bear fruit and growth can be expected to be robust for the next few years.
Personal lines such as health and motor will continue to be the growth drivers in the market.
Devesh Srivastava is the general manager of GIC Re. He can be contacted at: devesh@gicofindia.com
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