SANJAY KEDIA
term business, whatever is good for the policy holder is good for the shareholder. As long as we do things in the policy holder’s interest, we will deliver value to shareholders. Margins actually improve if you are selling the right product to the right person.
Are investors understanding the business?
Vaidyan: While the understanding of life insurance is catching up with investors, but not of non-life and especially reinsurance as it is a B2B business. At analyst conferences, it is a challenge explaining the nature of our business and that we don’t work like a PSU, but like an Indian MNC. We tell them we work in line with international best practices, and benchmark ourselves with global peers.
So I’m sure that it is only a matter of time, a few quarters that they will understand the business, because we saw a lot of interest now as they will understand both non-life and reinsurance segments.
Are you comfortable to disclose claims settlement data every quarter? How do you check mis-selling?
Chaudhry: The data is very clear that insurance companies have done a great job against mis- selling. Insurance industry realises that mis-selling is bad. Work is still required, we come across instances where if there isn’t mis-selling, there is misrepresentation or misunderstanding or some parts are not disclosed. The best way to avoid it is by keeping the product simple, which most companies have worked towards but it is an ongoing process.
How do insurers deal with high concentration risk like in crop insurance?
Srinivasan: The way insurers deal with it is to spread the risk to reinsurers. For example, 80 per cent of our risk is reinsured and reinsurers further reinsure it with other reinsurers. The risk is thus spread across various insurers. So there is absolutely no risk of concentration. We as experienced insurers know how to de-risk ourselves. We have repeatedly faced natural calamities and billions of rupees of losses. But we are able to handle it all through an appropriate reinsurance programme and that’s the beauty of insurance- spreading of risk.
Is there a problem with the order of preference issue for reinsurers where Indian reinsurers get top preference followed by the branch of a foreign reinsurer?