News Reinsurance24 Jan 2019

India Rendezvous:There is no disruption in reinsurance -- only evolution

| 24 Jan 2019

GIC Re chairman-cum-managing director Alice Vaidyan does not see any disruption ahead for the reinsurance industry.

Mrs Vaidyan, in her special welcome address at the inaugural ceremony yesterday of the 12th India Rendezvous, said, “Overall, one could say there is no disruption, only consistent evolution in the industry but, nevertheless, it does not mean that the challenges thrown up are any less formidable.”

“The reinsurance industry saw major disruption following the 9/11 events in 2001 where governmental solutions had to bridge the void created by the withdrawal of commercial insurance in regard to terrorism coverage.”

Mrs Vaidyan said, “Alternative capital experimented with the reinsurance sector through CAT bonds, sidecars and industry loss warranties — but those experiments apparently have met with only partial success.”

General insurance in India is at an inflection point

New India Assurance chairman-cum-managing director Atul Sahai said, “General insurance in India has come a long way, yet India remains one of the most under-penetrated insurance markets.”

He said, “Going ahead with the ‘push’ being provided by government insurance schemes such as the Prime Minister’s crop insurance scheme (Pradhan Mantri Fasal Bima Yojana or PMFBY) and Ayushman Bharat (National Health Protection Mission), there is tremendous growth possible, especially with an industry-friendly regulator.”

Reinsurance disrupted or enabled?

Another speaker, SCOR Global P&C Reinsurance CEO Jean-Paul Conoscente said, “Three major global drivers are generating significant changes with strong implications for the (re)insurance sector.”

“Demography and climate, economy and industry, and macro-economy and finance are the three major drivers of change and the areas they are impacting are sustainable development and energy transition; hubs, networks and connectivity and the intangible economy,” he said.

“The common theme in all these is resilience … for insurers, reinsurers and brokers.”

Role of government in enabling risk transfer

The first technical presentation of the day, by Swiss Re India branch CEO G Raju, focused on the role of government in public/private partnerships in enabling risk transfer.

Mr Raju said, “We need to step up engagement with governments and public institutions to highlight the utility of risk transfer in mitigating the financial impact of natural catastrophes on government budgets, and to build public/private partnerships to strengthen fiscal resilience.”

He said, “Creditworthiness also improves with risk transfer as ratings agencies have now started evaluating exposures to natural disasters and impact on financing and refinancing costs.”

Crop insurance in India has challenges

ACE Insurance Brokers director Anil Arora highlighted the critical role of the PMFBY in the Indian economy.

Putting aside media reports of profiteering by insurance companies from the scheme, he explained that insurers take on risk to protect farmers from the vagaries of nature and the impact of crop losses.

Essay competition winners feted

Mrs Vaidyan also gave away awards to the winners of the ‘Energising insurance in India’ essay competition. The first prize winner was Mr Nirjhar Majumdar of LIC and the runner-up was Mr Arun Agarwal , independent director of Kotak Mahindra General Insurance.

The three-day India Rendezvous, attended by over 700 delegates, ends today.

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