Despite a low penetration rate, the Indian insurance industry has performed well in the recent past. However, low penetration of insurance is also an indication that opportunities for the industry are plenty. Anup Rau, CEO and MD, Future Generali India Insurance is optimistic about the future. Rau has been associated with the industry for 19 years. In conversation with Dipen Pradhan, he shares his views on the insurance industry’s current scenario, prospects of regulatory changes and growth. Edited excerpts.

What is your view on the current scenario of India’s insurance industry?

Insurance industry has performed well in the recent past. It has continued to grow really well, yet the base is low. This is true for every segment of the country. We are at a developing stage where you will find that penetration opportunities are huge because they are under an extremely low base. It is not unique to the insurance industry. With all these factors in place, I expect the industry to mature in the next 15-20 years.

With motor vehicle insurance segment being the slowest, will regulatory changes benefit both insured and insurers?

Regulatory intervention will have effect in bringing in more compliance. Plans have been issued in the two-wheeler segment, and not so much in the four-wheeler segment. Also, the Insurance Regulatory and Development Authority of India has set up a committee to examine people’s driving behaviour, which can be used to price premium to the customer. Some people have raised questions on the fact that as acts and regulations have been changed, fine amount have gone up substantially.

The fact is, in India, fines are very low to begin with. If there is a non-compliance, you leave the government with little choice to do something. However, if you use data to analyse driving behaviour and then prepare a premium, it will be appropriate. For people who drive safely with clean claim records and have never been fined, will have a fair premium than those who drive carelessly.

How has technology impacted the industry?

Technology has been important in terms of digital and digitisation. By digitisation, we mean digitisation of records, processes. The other, digital, is a medium of transaction. Let us also understand that in case of normal interaction with the customer, on a scale of 0-10, is 5, using Artificial Intelligence (AI) and digitisation will take it up to seven. But in order to take it to 10, we have to bring back human intervention, as its quality plays an important role. Given the fact that data is put by various sources, data analytics will slice and dice the same in order to understand various customers’ requirements. Then technology comes into play. Three major elements do the work—information and data available, use of analytics and AI, and delivering it to the customer.

What trends do you observe in the use of data by insurance companies?

Earlier a lot of companies had a competitive advantage because the data they had, were somewhat proprietary. Now, the days of proprietary data are almost numbered as more and more sources for data are going to be made available to the public.

Therefore, companies that are more agile and are able to deliver value to customers at a much lower cost with good innovative products, are the ones who should have an advantage.