36th Annual Conferenceof

African Insurance Organisation (AIO) African Insurance Organisation (AIO) Tanzania Tanzania

General Insurance Corporation of IndiaGeneral Insurance Corporation of India

Access to Insurance ServicesAccess to Insurance ServicesThe Role of Customers

Insurance Landscape in India

• India: a vast & virgin market for insuranceIndia: a vast & virgin market for insurance• Economic Growth has provided the impetusEconomic Growth has provided the impetus• Freedom to paint the canvas in any wayFreedom to paint the canvas in any way• High growth in automobile & Health care High growth in automobile & Health care

sectorsector• Burgeoning middle class with better life-Burgeoning middle class with better life-

stylestyle• Till recently tariff- based with low claimsTill recently tariff- based with low claims• A long history with solid foundationA long history with solid foundation

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Pre Liberalisation ScenePre Liberalisation Scene• Status of Customers’-pre Status of Customers’-pre

liberalisation liberalisation – A case of ‘One Shoe Fits All’.A case of ‘One Shoe Fits All’.– Traditional & Uniform Policies by LIC & Traditional & Uniform Policies by LIC &

4 PSUs. 4 PSUs. – Virtually no choice for the CustomersVirtually no choice for the Customers– Low insurance awareness led to customers Low insurance awareness led to customers

not being aware of their insurance needs not being aware of their insurance needs – ‘‘Take it or leave it’ attitude of the InsurersTake it or leave it’ attitude of the Insurers– Insurance was sold; never boughtInsurance was sold; never bought

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Post-Liberalisation ScenePost-Liberalisation Scene

• Current Scene & Role of CustomersCurrent Scene & Role of Customers– New players on the sceneNew players on the scene– Customers are better informed & sensitiveCustomers are better informed & sensitive– Demand for new, better & variety of Demand for new, better & variety of

productsproducts– More players, more competition, More players, more competition,

customers benefitcustomers benefit– Changes in economy & social milieu also Changes in economy & social milieu also

promote transformation and growthpromote transformation and growth– Detariffication reflects growing demands Detariffication reflects growing demands

of Indian consumers.of Indian consumers.

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Educating the CustomerEducating the Customer• The RegulatorThe Regulator• InsurersInsurers• IntermediariesIntermediaries

– Educating the customers to make Educating the customers to make them more informed them more informed

– Benefits of taking adequate & Benefits of taking adequate & appropriate risk coversappropriate risk covers

– Non-dependence on the ‘Chance Non-dependence on the ‘Chance Factor’Factor’

– Not only pure products but also Not only pure products but also pension, health-care & investment-pension, health-care & investment-based based

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Consumer ActivismConsumer Activism•Prominent in Health Prominent in Health

Insurance, Insurance, (one of the fastest

growing segments) catalysed by: catalysed by: – Rising Cost of Medical TreatmentRising Cost of Medical Treatment– Life Style DiseasesLife Style Diseases– Health ConsciousnessHealth Consciousness

•Customers demand for better Customers demand for better & simple products & better & simple products & better servicesservices

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• Consumer Fora & NGOs helped in bringing Consumer Fora & NGOs helped in bringing about changes in the Health Insurance.about changes in the Health Insurance.– Simple one-page policySimple one-page policy– Scope of ‘Senior Citizens’ expanded Scope of ‘Senior Citizens’ expanded – Renewal of Policies can’t be rejectedRenewal of Policies can’t be rejected– Critical Illnesses are coveredCritical Illnesses are covered– Coverage of pre-existing diseases made possibleCoverage of pre-existing diseases made possible– Portability of Health Insurance PoliciesPortability of Health Insurance Policies

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Health Insurance -Consumer Health Insurance -Consumer ActivismActivism

Government-Industry Government-Industry EffortsEfforts

• National Health Insurance National Health Insurance ProgrammeProgramme– For less then $ 1 per annum policy For less then $ 1 per annum policy

holders entitled to $ 600 of medical holders entitled to $ 600 of medical care at care at most public/ private most public/ private hospitals.hospitals.

– Launched by Federal Government in Launched by Federal Government in collaboration with Public & Pvt. collaboration with Public & Pvt. Insurance Companies. Insurance Companies.

– Extended to sections other than BPLExtended to sections other than BPL8

Why Redressal?Why Redressal?– Liberalised Insurance Sector yet to MatureLiberalised Insurance Sector yet to Mature– Transitory & Consolidation PhaseTransitory & Consolidation Phase– Low Consumer AwarenessLow Consumer Awareness– Poor Insurance PenetrationPoor Insurance Penetration– Proactive Consumerism in Insurance MissingProactive Consumerism in Insurance Missing– Need for Disciplined & Co-ordinated FunctioningNeed for Disciplined & Co-ordinated Functioning

• Insurance Regulatory & Insurance Regulatory & Development Authority (IRDA) set Development Authority (IRDA) set upup– To ensure a healthy & systematic growth of the To ensure a healthy & systematic growth of the

sector and ensure that customers get a fair dealsector and ensure that customers get a fair deal

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Consumer Protection MechanismConsumer Protection Mechanism

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IRDA: the RegulatorIRDA: the Regulator

Enactment Enactment of IRDA Act, 1999 & of IRDA Act, 1999 & Constitution of IRDA - An Autonomous Constitution of IRDA - An Autonomous body tobody to

•Regulate & Develop Insurance BusinessRegulate & Develop Insurance Business•Promote Market Efficiency – Protect Promote Market Efficiency – Protect interests ofinterests of

PolicyholdersPolicyholders•Promotion and Regulation of ProfessionalPromotion and Regulation of Professional

Organisations of InsuranceOrganisations of Insurance•Regulating Maintenance of Margin of Regulating Maintenance of Margin of SolvencySolvency

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Grievance Redressal Grievance Redressal MechanismMechanism

InsurerInsurerIRDA (Protection of Policy IRDA (Protection of Policy holders’ Interests ) holders’ Interests ) Regulations, 2002Regulations, 2002

•All communications from policy-holders All communications from policy-holders responded to in 10 days.responded to in 10 days.•Guidance on how to lodge a claim.Guidance on how to lodge a claim.•Settlement of claim with in 7 days of Settlement of claim with in 7 days of acceptance of offer of settlement.acceptance of offer of settlement.•Proper procedures & effective mechanism Proper procedures & effective mechanism to address grievances efficiently.to address grievances efficiently.•Information about Insurance Ombudsman Information about Insurance Ombudsman communicated with the policy document.communicated with the policy document.

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IRDA: Regulatory Role- IRDA: Regulatory Role- Consumer ProtectionConsumer Protection

Insurance Advertisement & Insurance Advertisement & Disclosures Regulations, 2000Disclosures Regulations, 2000Protection of Policy holders’ Protection of Policy holders’ Interests Regulations, 2002Interests Regulations, 2002Maintenance of Minimum Maintenance of Minimum Solvency MarginSolvency MarginRegulatory Norms for Regulatory Norms for IntermediariesIntermediaries

Licensing of Insurance (Individual) Licensing of Insurance (Individual) Agents- 2000Agents- 2000Licensing of Corporate Agents- Licensing of Corporate Agents- 20022002Insurance Brokers- 2002 Insurance Brokers- 2002

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Federal Grievance Redressal MechanismFederal Grievance Redressal Mechanism•Directorate of Public GrievancesDirectorate of Public Grievances

•Looks into public grievances with government Looks into public grievances with government departmentsdepartments•Headed by a Senior Federal functionaryHeaded by a Senior Federal functionary•Public Sector Insurance Companies (Life & Non-life) are Public Sector Insurance Companies (Life & Non-life) are part of governmentpart of government

•Right to Information Act 2005Right to Information Act 2005•Redressal mechanism for information from Government & Redressal mechanism for information from Government & Government owned or aided organisationsGovernment owned or aided organisations

•Consumer Protection Act, 1986Consumer Protection Act, 1986•District ForumsDistrict Forums•State Consumer Disputes Redressal Commission State Consumer Disputes Redressal Commission •National Consumer Disputes Redressal CommissionNational Consumer Disputes Redressal Commission

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Indian Insurance IndustryIndian Insurance IndustryGrievance Redressal MechanismGrievance Redressal Mechanism

Indian Insurance Industry hasIndian Insurance Industry has3-tier grievance redressal mechanism3-tier grievance redressal mechanism

InsurersInsurersOmbudsmanOmbudsmanConsumer Forums & Regular Civil Consumer Forums & Regular Civil CourtsCourts

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Grievance Redressal MechanismGrievance Redressal MechanismOmbudsmanOmbudsman

•Introduction of Insurance Introduction of Insurance Ombudsman-1998Ombudsman-1998

•Quasi judicial mechanism-empowering Quasi judicial mechanism-empowering adjudication of disputesadjudication of disputes•Adjudication limited to personal lines of Adjudication limited to personal lines of business-business- insurance contracts of value not insurance contracts of value not exceeding US $ 40,000exceeding US $ 40,000• Award binding on Insurer but not on the Award binding on Insurer but not on the insured. Award to be honoured in three insured. Award to be honoured in three months. months. •Currently 12 Ombudsman across the Currently 12 Ombudsman across the countrycountry•Applicable on both, Public & Private.Applicable on both, Public & Private.•Simple filing procedure & no legal attorney Simple filing procedure & no legal attorney required required

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Grievance Redressal Grievance Redressal MechanismMechanism

IRDAIRDAGrievance redressal mechanismGrievance redressal mechanismAssesses the quality of service Assesses the quality of service provided by the insurersprovided by the insurersIdentifies grievance prone areas that Identifies grievance prone areas that require Regulator’s interventionrequire Regulator’s interventionProvides online registration/redressal Provides online registration/redressal of consumers’ grievances of consumers’ grievances Scope for Arbitration and Conciliation Scope for Arbitration and Conciliation options options

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Insurance Awareness, Reach & Insurance Awareness, Reach & EducationEducation

•Media Campaigns•Standardisation of Policy documents and other literature•Updated Web-portals: Online Premium Calculator, Rates & Conditions & Payments•24-hour toll free call numbers•Implementation of ‘state-of-the-art’ technology•Representation of Policy Holders/ Consumer Activists on Board

Regulator & InsurersRegulator & Insurers

GIC Re: A ProfileGIC Re: A Profile• Reinsurance support on facultative & treaty

basis for risks in India & abroad

• Manages Pools- Terrorism Insurance Pool,

Indian Motor Third Party Insurance Pool &

Marine Hull Pool

• Diversification in areas of Life, Takaful Re,

Liability & Oil & Energy

• Enhanced Risk Management Capabilities

• Value Added Services to Customers

• Technical Underwriting aided by IT Tools

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Standard & Poor’s, A M Best & CARE Standard & Poor’s, A M Best & CARE Standard & Poor’s ranking (latest 2007)

of top Reinsurers: GIC Re moves to 16th position from 22nd

Rated “A-” (Excellent) by A. M. Best for Financial Strength

Rated AAA (in) for its Claims Paying Ability by CARE (Credit Analysis and Research Limited)

GIC Re is the 5th Largest Aviation Reinsurer

GIC Re: Ranking & Rating

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International Business Capacity

Type Capacity (PML) Capacity (SI)

Facultative Business US$ 20 Mln US$ 50 Mln

Treaty Business US$ 4 Mln US$ 10 Mln

Foreign Inward Business (Other than Aviation)

Type Any One Hull Liability (AOO)

Facultative (International)

Airlines US$ 10 Mln US$ 100 Mln

General Aviation US$ 5 Mln US$ 30 Mln

Treaty US$ 500,000 Any One Acceptance

Aviation Business

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GIC Re’s Overseas Operations

GIC Re sources its business globallyGIC Re sources its business globally

Branch offices in London and Dubai Branch offices in London and Dubai & Representative office in Moscow& Representative office in Moscow

Eventual Reinsurer Status in Eventual Reinsurer Status in Brazilian marketBrazilian market

Foreign Operations contributed Foreign Operations contributed approx. 27% of total business in approx. 27% of total business in 2007-082007-08

Thrust areas: Far East Asia, Africa, Thrust areas: Far East Asia, Africa, Middle East & G8Middle East & G8

GIC Re also holds significant GIC Re also holds significant

interests in –interests in –

Kenindia & East Africa Re in Kenya Kenindia & East Africa Re in Kenya

Asian Re, ThailandAsian Re, Thailand

India International Insurance, Singapore India International Insurance, Singapore

LIC (Mauritius) Offshore Limited, MauritiusLIC (Mauritius) Offshore Limited, Mauritius

GIC Re’s Overseas Operations

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Business Performance – 2007-08Business Performance – 2007-08

US $ MlnUS $ Mln

Gross Premium 2,337

Net Premium 2,085

Profit before Tax 268

Assets 9034

Investments 7,324

Solvency Ratio 3.36