TERRORISM IS A PART OF MOST POLICIES

Vishakha Mulye is a chartered accountant by profession and has been with ICICI Bank for 15 years. She played a major role in the merger of ICICI with ICICI Bank and was the group financial officer before she joined ICICI Lombard — a 74:26 joint venture between ICICI Bank Limited and Fairfax Financial Holdings Limited of Canada — as executive director in November last year. The shift from banking to insurance was not much of a challenge and Ms Mulye says, "I have always been in the field of financial services. The insurance segment is an extension of financial services, but a different product."

Excerpts from an interview by Yogesh Mehendale and Olga Tellis:

As the largest private general insurance company in the country, how do you see the sector today?

In India, private general insurance companies started their operations just a decade ago. So overall the industry is in a nascent stage. Ten years back, the share of the sector in the gross domestic product (GDP) was 0.5 per cent. Even today it is just 0.6 per cent of the GDP compared to four to 4.5 per cent in the US or UK. In Korea, it is 1.50 per cent and in China it is 1.20 per cent. The Indian industry has an abnormally low share in GDP. The experience in other parts of world is that the general insurance sector booms when per capita income crosses $1,000. India has crossed this, so one can say that this sector will explode in the near future.

Why has this sector been slow to grow?

General insurance is more protection based — protection of an asset. So, there is a lag in returns. People don’t think of insuring their homes and consider it an additional burden, not realising that the home can be burnt down or anything can happen. Life insurance for instance is seen as savings- based. So, life grew from one to four per cent, mutual funds from five to 15-16 per cent of the GDP and consumer loans from five to 14 per cent.

How are you meeting this challenge?

As I said, the Indian general insurance sector has tremendous scope to grow as only two per cent is spent on health, 98 per cent of the houses are not insured and even a large number of the motorcycles don’t have cover. There is demand; the question is how we cash it. We have come with several innovative products such as last minute travel insurance, insurance cover which an NRI can online gift his/her parents, cover for students studying abroad etc. We have tied up with 500 universities across the globe. So we are using technology to give better service in the form of online/mobile commerce.

What would you differentiate yourself from the other players?

Our USP is claims. In general insurance 65 per cent of the money goes back to the customer as claims settlement. How fast you settle the claim, becomes extremely important for renewal as well. For example, if our customer’s car is damaged, he can call on a toll free number and our executive will reach the spot within six hours. In this case we have a cashless option as well. We have tied up with 4,500 garages across the country.

Has de-tariffing helped the industry?

From January 2008 onwards the insurance companies have the freedom to decide the premium on the basis of the risk. Interestingly, in other countries de-tariffing led to de-growth but in India we are seeing a growth of 20 to 22 per cent.

There is a lot of expectation that the government will now permit 49 per cent FDI in insurance. Can you comment in this?

We are very excited, as the industry requires capital for growth. Currently foreign investment of 26 per cent is allowed in the insurance sector. International players are bullish on India and are interested in investing in the insurance sector.

Is there a spurt in growth for cover against terrorism considering that there have been a growing number of terrorist attacks across the country?

Terrorism is a part of most policies sold today. The Insurance Regulatory Developmental Authority (IRDA) has mandated that all general insurance companies should be allied to a common pool for terrorism insurance. As a result, the premium of terrorism insurance collected by all general insurance companies is collected in this common pool. Any terrorism related insurance claims are settled using funds from this common pool.
Source: Deccan Chronicle