Ushering in the roaring 20s
We always look forward to a New Year with a lot of hope and aspirations. The year 2020 has also begun on a hopeful note.
IRDAI has announced the 33 proposals that have been approved for the regulatory sandbox project. Almost all of the successful ones relate to the health and motor portfolios, which constitute the major part of the Indian non-life GWP every year. I am hopeful that all of these proposals will shape out well and mark a new beginning in the Indian insurance industry.
All of us need to appreciate that as we step into the third decade of our new liberalised avatar, we mature further, and maturity should bring with it good corporate behaviour. The market is showing perceptible signs of hardening and holding on to rates is the call of the hour. I am hopeful, 2020 will make all of us more circumspect and better corporate citizens.
We in India have always lived with the best of times and the worst of times. Natural disasters are nothing new for us and the insurance industry has never been found wanting in such circumstances. We have always been among the first to provide relief and succour to the affected. However, at times, commercial considerations overtake. In such situations it would be good to recall the recent decision of The Business Roundtable, an influential group which represents the chief executives of 181 of America’s largest companies.
The Roundtable amended its two decade-old declaration that “corporations exist principally to serve their shareholders”. Its new declaration reads, “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders” – customers, employees, suppliers, communities and – last in the list – shareholders.
Hence, as risk takers of the society, we the insurers need to give-up the doctrine of “shareholder first” and amend our views on how we need to run our companies. I am sure if we can keep our customers satisfied and happy, our shareholders too would be happy. We in India have ample latent potential for all of us to survive and sustain profitably.
We also need to acknowledge what is happening in Australia, Philippines, Thailand and many other countries, also including some parts of our own. If these events continue unabated, we would be the first to be out of business. While we have no means to stop or change the moods and moves of nature, we do have the means to ensure that their impact on us is minimised.
Subsequent to liberalisation, while the spirit of competition was welcomed, in our quest for top line and bottom line we perhaps forgot that loss prevention and loss minimisation are important aspects of loss control in insurance. Steps for loss prevention and loss mitigation not only help the insured and the insurer but also help mitigate economic losses in a larger context.
I am happy to note that the regulator has taken the initiative in this regard and has called for synergising the activities of the various stakeholders involved in these activities for the benefit of all concerned. I hope the industry will support all efforts in this direction.
At this stage it would be pertinent to note that the biggest losses that we now face are from the known unknown - the cyber risks. While the potential losses from cyber-crimes are really mind boggling, it would be good to recall that almost 60-70% of the cyber incidents can be avoided if the man behind the machine is more skilled and careful. So, while we do underwrite cyber-risks, it would be better if we develop a comprehensive strategy to make all our customers more aware about how this scourge can be avoided. Then I am sure we would have won half the battle.
There is a lot of hope ahead and a lot to be gained, we only need to change our perspective a little and look at the glass half full rather than half empty. To conclude, I would like to quote the industry’s doyen Dhirubhai Ambani, “For those who dare to dream, there is a whole world to win.” Let us dream and work for a successful and sustainable Indian insurance industry in the new decade.
I sincerely appreciate the efforts of Asia Insurance Review to have created the India Rendezvous platform for the Indian insurance industry to come together and ponder over the issues that can make or mar our future. I hope and wish we make the best use of it. Lots of good luck to all of us.
Mr Devesh Srivastava
General Insurance Corporation of India