One of the biggest challenges in the industry today is penetration which is again interlinked with pricing. Pricing again is interlinked to underwriting and claims cost, shared Suresh Agarwal, Managing Director & CEO, Kotak Mahindra General Insurance Company Limited, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN)
Could you elaborate on the major transformation currently underway in the general insurance industry and how it is impacting traditional business models?
The general insurance industry is on a steady growth path and there have been significant tailwinds, post COVID, aiding this growth. Overall the atmosphere is very pro-industry and pro-consumer aimed at increase insurance penetration across the country.
- Ease of product filing – The regulatory intervention has significantly reduced the time for product filing and going to market, encouraging insurers to file multiple products for different needs and consumer segments.
- Bima Sugam – It is another important and ambitious initiative from the regulator involving the entire insurance ecosystem that will greatly benefit both the industry and consumers. Through BIMA SUGAM, all insurance products and services across insurers will be available to consumers on a single platform.
- Insurance for All by 2047 – Like BIMA SUGAM, Insurance for All by 2047 has brought together the entire industry to deliver last mile insurance across the country. Under this initiative, each insurer has been assigned a State in which they will be responsible for spreading insurance awareness, inclusion and increasing penetration. Each insurer will be working towards, recruiting BIMA VAHAKs in underserved geographies and consumer segments and distributing a standard product BIMA VISTAAR. It is envisaged to be a digital platform for delivery of insurance products. This initiative will not only increase penetration, but will also lead to job creation in every state across the country.
Also Read | Gen AI’s Impact on Insurance: A Forward-Thinking Approach
Additionally, EOM and commission guidelines have given flexibility to the industry while helping increase customer focus; also, the regulator moving away from “rule-based to principle-based” is a very pro-industry move.
What key industry trends do you believe are shaping the general insurance sector today? This includes the growth of bancassurance, increasing demand for health insurance, and the evolving customer experience. How is your organisation positioning itself to navigate and capitalize on these trends?
- Increasing demand for health insurance – There has been a significant rise in awareness of health insurance post-COVID. Consumers today are more receptive to the health insurance pitch. This is evident in the health insurance premium growth recorded by the industry this year. Our own Health insurance recorded a growth of 75% over last year.
- Customer experience is assuming all the more importance since it is a price-driven category, and experience adds as a differentiator. We at KGI are cognisant of this trend and have been steadily investing in technologies and initiatives to augment customer experience. Our NPS scores are satisfactory and are a testament to our strategy.
- AI is another area which is increasingly shaping the industry in areas like customer service, claims and fraud management.
- Bancassurance is another focus area for us since we have a large Kotak Bank franchise that is being tapped.
Could you discuss some of the specific challenges that the general insurance industry faces, such as the high cost of claims and the need to improve underwriting standards? What approaches is your organisation taking to address these challenges effectively?
One of the biggest challenges in the industry today is penetration which is again interlinked with pricing. Pricing again is interlinked to underwriting and claims cost. All of these elements need to be finely balanced. A better pricing would result in further affordability and better penetration. However, to get a better pricing, there has to be better underwriting and sustainable claims costs. While genuine claims are not a concern, it is the fraudulent claims that impact. To counter this, we have been actively pursuing a cashless and preferred network strategy where our customers get quality service. Kotak Meter is another innovative example where we have tried to address the pricing issue through the switch on/off feature, thereby treating customers fairly.
The Meter App introduced by Kotak General Insurance is an interesting development. Could you provide more details about this app and how it enhances the private car insurance policies offered by your company? What unique benefits does it bring to policyholders?
We at KGI are excited about the Kotak Meter Add-on product and it’s potential. It is based on a usage-based principle of switch-on and switch-off. A policyholder can switch on their policy when the vehicle is in use and switch it off when it is not is use. And all this is administered through the Kotak Meter App. The biggest benefit is that it treats customers fairly. You only pay for the number of days your vehicle was in use and do not pay for days when your vehicle is not in use. There are multiple use cases depending on different consumer segments. For example, many customers only drive their car during weekdays, and some only during weekends. Then there are hybrid work-from-home customers who occasionally drive to work. This is a great add-on to have designed keeping the changing trend in our societies in mind.
Also Read | Customer First, Technology Next: Bajaj Allianz’s Winning Approach to Digital Transformation in Insurance
Kotak General Insurance recently became the first company in India to offer cashback via an add-on for private car insurance policies. Can you elaborate on this innovative feature, how it works, and the benefits it provides to policyholders?
Cash-back was the sweet spot we found in the category that no one was offering or talking about. It is based on a usage-based principle of switch on and off. A policyholder can switch on their policy when the vehicle is in use and switch it off when the vehicle is not in use. And all this is administered through the Kotak Meter App. For every 24 hours that the policy is switched off, one earns a reward day. Depending on various slabs of reward days, these can be redeemed as a discount on your subsequent renewals. If you do not wish to renew with us, the cashback is refunded back to you. At the highest slab, one can earn a maximum of 40% on the Own Damage (OD) premium amount, which is a substantial savings.
Elets The Banking and Finance Post Magazine has carved out a niche for itself in the crowded market with exclusive & unique content. Get in-depth insights on trend-setting innovations & transformation in the BFSI sector. Best offers for Print + Digital issues! Subscribe here➔ www.eletsonline.com/subscription/
