Weather & Weddings Too ; the General Insurance Industry Is Slowly Rolling Out Innovative Products, but Unless the Business Is Deregulated, Companies Can't Be Too Creative with Their Offerings.

Summary

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Bajaj Allianz may have thus far insured 60 weddings (against monetary losses arising from cancellation or accidents), and ICICI Lombard may insure the weather (for instance, to protect farmers from crop damage), but the non-life insurance industry in India is constrained by regulations. Thus, for instance, an insurance firm cannot charge a higher premium to insure a sports car being driven by a 25-year-old from New Delhi than it would to insure a mid-sized sedan driven by a middle-aged woman in Chennai. Most non-life insurance products in India are tariffed, which means companies more or less charge the same, irrespective of who the customer is. Tariffing is a logical component in an industry's early years. Insurance companies make money by risk management; to do so, they need adequate data; in an industry's early years, they may not have enough data to assess the risks, and, ergo, to arrive at the right tariff (or premium) for a product. India's non-life insurance industry, opened to private competition at the same time the life insurance industry was, however, believes that the time is ripe for de-tariffing. "In a detariffed environment, the premium, say in motor insurance, will be determined on the basis of a customer's track record, the quality of driving, the repair cost, etc.," says Sandeep Bakhshi, Managing Director, ICICI Lombard. Today, that isn't possible; almost 70 per cent of all non-life insurance products fall under the tariff regime; this includes the top revenue generators, motor and fire insurance.

The big growth driver for non-life insurance companies, however, could be health insurance, now a mere Rs 1,400-crore business. Executives in general insurance companies, however, believe that much of this has to do with the country's poor healthcare infrastructure. This will change, they promise. "The size of the total health industry is almost Rs 1,50,000 crore," says Bakhshi. "I believe the insurance industry should get at least 10-15 per cent of this, Rs 10,000-15,000 crore."

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Weather & Weddings Too ; the General Insurance Industry Is Slowly Rolling Out Innovative Products, but Unless the Business Is Deregulated, Companies Can't Be Too Creative with Their Offerings.

If the mood in the non-life industry is a trifle subdued, blame it on the fact tha...

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