A CII – EY Report on the Insurance Industry titled ‘Building Growth, Building Value’ recommends chasing efficiency in distribution by finding greater synergy among the different channels. This will help in well-rounded industry growth and enable maximum value creation for all the stakeholders. The report also states that insurers must be careful in identifying the right ways to employ additional capital inflows that they may receive over the next few years with capital infusion from the foreign partners.
Mr Sanjiv Bajaj, Chairman, CII National Committee on Insurance & Pensions said, “The market has expanded and given each one of us more than enough room to prosper. Solvency is far in excess of minimum regulatory requirements. We made some mistakes and the slowdown of the economy hit us hard but the regulator stepped in and the life insurance sector responded by realigning well. The onus is clearly on the industry to realise its full potential in the coming years.”
Mr Rohan Sachdev, Global Insurance Emerging Markets Leader and Partner, EY India said, “The Indian insurance sector has evolved and is looking at the future with renewed optimism. In order to realize the full potential, the industry must focus on aspects that will build value for all stakeholders – customers, distributors, shareholders and the insurers. A step-by-step approach must be adopted to build value for customers, the primary stakeholders. Technology and analytics helps to understand exactly what customers want thereby creating long-term value for customers and earning their loyalty.”
The report highlights that:
· Skill development at an industry level and better service integration between the insurer and the distributors will help in distribution efficiency.
· The potential capital infusion must be effectively utilized to drive awareness and reach out to the under-penetrated segments.
· Insurers must embrace digital with a resilient cyber security framework to disrupt the traditional business structures.
The report also states that cyber security is a key risk area for insurance. Companies maintain information systems for core processes such as sales management system, policy administration system and claims management system, and as a result are one of the prime targets for cyber-attacks. To improve information security, insurance companies need to develop a strong risk management and governance framework by implementing enterprise-wide security programs that address processes and controls, privacy and data protection. Regular initiatives to measure monitor and report the effectiveness of security programs will help to refine strategies based on the changing threats.
The report also shares a view on issues in the global markets identifying themes which may play out in the Indian context in the future. The Indian insurance industry has witnessed both volatility and success over the last decade and must strive to maintain high governance standards and eliminate risks.