The insurance sector of India has undergone significant changes due to regulatory reforms, technological advancements, and evolving consumer preferences. These changes have led to a customer-centric and technologically advanced industry, improving accessibility, transparency, and efficiency.

ICICI Lombard, a leading private general insurance company in the country, has been recognized for its customer-centric approach and innovative solutions. The company has received numerous awards ‘Emerging Company of the Year’ at ET Corporate Excellence Awards, ‘Highest Growth GI’ at the Assocham 14th Global Insurance Awards, National Training Awards at the Golden Peacock Awards, Best Insurance Company in Non-Life Insurance sector at the Dun & Bradstreet BFSI Fintech Awards, ET Business Leadership Awards for #SalaamMSME Campaign, Special Jury recommendation for EGS initiatives at the FICCI Insurance Industry Awards, ET Ascent National Awards for CSR initiatives, Vigyan Bhawan National CSR Awards for Caring Hands & Niranjali initiatives, Guinness World Record for its CSR initiatives and many more. The awards are a testament to the trust reposed in the Company by its customers, partners and other stakeholders.

The Unique Significance of General Insurance

Unlike many other industries, general insurance sector offers a wide range of products that cater to various needs. Mr. Agarwal believes that the sector is exceptionally unique within the realm of financial services. These products include property protection, logistics coverage, legal liability insurance, as well as health and accident coverage. General insurance encompasses a vast spectrum of protection.

The general insurance sector also holds far-reaching social relevance. Insurance is typically sought when individuals find themselves in distressing situations. Therefore, it serves as a means of social benefit. Recognizing its importance, the Government of India has introduced various schemes over the past two decades to address the needs of the society. These schemes aim to provide insurance coverage on a large scale, especially for individuals from economically disadvantaged backgrounds.

Safeguarding Interests and Enhancing Convenience

Mr. Agarwal emphasizes that the insurance industry has been at the forefront of working with large data, even a century ago. It was the first industry to extensively utilize and develop data science, which became the foundation of insurance practices. However, recent advancements in technology, such as AI and ML, have further revolutionized the industry. Mr. Agarwal provides several examples to illustrate these developments.

In the logistics sector, tracking vehicles using embedded chips has become a standard practice. If a vehicle deviates from its designated route, immediate actions are triggered, including reporting to the police. This enables timely intervention and potential apprehension of culprits.

IoT devices are utilized, such as pressure gauges in fire hydrant systems. These devices raise an alarm if the pressure falls below a certain threshold. This ensures that fire hydrants are operational when needed as they tend remain unused and unmaintained for extended periods of time.

AI and machine learning are employed extensively in the settlement of health insurance claims. Past data is analysed to identify potential fraudulent claims. Based on this analysis, the system triggers investigations into suspicious cases, thus aiding in determining their validity.

Digital platforms are utilized for inspecting vehicles when insurance is due. Customers capture photographs of specific points in their vehicles, and the system utilizes AI to determine the insurability of the vehicle. This streamlines the process and improves efficiency.

ICICI Lombard, along with the industry, has been pioneering various technological innovations in these areas, utilizing technology extensively to enhance operations and provide better services.

Client Assistance Initiatives

Mr. Agarwal highlights several ways in which ICICI Lombard assists its clients. Firstly, by identifying and eliminating fraudulent clients, the company ensures that honest customers do not bear the burden of fraudulent claims, resulting in lower prices for them. This service aims to protect the interests of genuine policyholders.

Secondly, ICICI Lombard offers convenience through virtual vehicle and factory inspections. By utilizing technology, customers no longer have to wait for physical inspections by surveyors, significantly reducing turnaround time.

Thirdly, the company provides a seamless experience to customers by offering both digital and physical channels. Customers can choose the virtual channel for insurance purchase and servicing, with the option of receiving physical assistance if needed. This approach enhances convenience and accessibility for clients.

ICICI Lombard also offers value-added services such as IoT and telematics-based solutions. These services leverage technology to enhance coverage and provide additional benefits to customers.

Overcoming Distribution Challenges

Mr. Agarwal identifies the major challenge faced by ICICI Lombard when entering the insurance industry.

They had to compete with four public sector companies that had extensive distribution networks through their own offices, making it difficult for ICICI Lombard to establish a comparable presence without incurring excessive costs.

To overcome this challenge, the company implemented various initiatives. They introduced an e-channel for sourcing business, allowing customers to access insurance services through virtual platforms. Additionally, claims were processed remotely to enhance convenience for policyholders.

ICICI Lombard also established virtual offices, enabling employees to work from home while being equipped with the necessary technological facilities and gadgets. Currently, the company operates 305 branches, providing a distribution footprint that matches that of public sector companies.

Recognizing connectivity issues in rural areas, ICICI Lombard devised an offline/online mode known as the ILPOS system. This system enables agents to work offline throughout the day and synchronize their data with the company’s system once a day. This approach addresses challenges such as power cuts and unreliable internet connectivity prevalent in smaller towns and cities.

Transforming Customer Experience

ICICI Lombard has introduced personalized services to enhance the customer experience, such as IL TakeCare (ILTC), a health app with multiple features. One notable feature is the ability to provide vital parameters like blood pressure, pulse rate, heart rate, and oxygen content with just a face scan within two minutes. ILTC also enables users to schedule appointments with doctors, conduct video and teleconsultations, purchase medicines virtually through e- medicine facilities, and arrange home-based blood tests and sample collection. Its one stop digital solution IL TakeCare app has over 5.6 million downloads till date, making it a significant technological offering in the insurance industry. Additionally, ICICI Lombard allows customers to purchase other policies such as motor and travel insurance through the app, which continues to evolve and expand its capabilities.

Another noteworthy initiative undertaken by ICICI Lombard is the migration of their core systems to the cloud, making them the first large company in the insurance industry to do so. This cloud migration has resulted in reduced system downtime, increased stability, and enhanced agility, significantly improving the reliability and speed of their operations.

In terms of claim approvals for health insurance, ICICI Lombard employs an AI-powered system that approves estimates sent by hospitals in approximately 85% of cases. This automated approval process, based on the provided hospital data, often takes minutes or even seconds, minimizing turnaround time and providing added convenience for customers.

Through these technological advancements and streamlined processes, ICICI Lombard aims to provide personalized and efficient services to its customers, prioritizing their health and well-being while ensuring a seamless experience.

Unleashing Potential

While there is already a significant amount of business in the top 20 cities in India, the penetration of insurance products like motor insurance, health insurance, and travel insurance is increasing rapidly in smaller regions and rural areas. Mr. Agarwal emphasizes that the emerging market in India holds immense potential for the future. Companies that perform well in this segment have the opportunity to become market leaders in the future. Therefore, it is crucial for any company aspiring to be a significant player to have a strong presence in rural areas.

India has over 700 districts, and each district headquarter represents distinctive business potential. Even remote areas like hilly states, Jammu and Kashmir, and the north-eastern regions have shown promising business potential. The key is to reach out to people where they are, irrespective of their wealth status. While some may opt for small-ticket insurance, with a population of over 1.4 billion, there is substantial opportunity for insurance penetration. Globally speaking, even poorer countries have higher insurance penetration rates compared to India. Therefore, it is important to penetrate deep into the hinterlands to tap into India’s demographic dividend, reaching the masses in the most remote areas. This approach has become a significant part of ICICI Lombard’s overall momentum.

Expanding insurance coverage in rural and emerging markets not only benefits the insurance industry but also contributes to the development of healthcare infrastructure. When people have access to affordable healthcare through insurance, the overall health infrastructure tends to improve. Currently, more than 60% of health expenditures in India are out-of-pocket expenses, mainly focused on outpatient care. This indicates a significant opportunity for health insurance and outpatient services in the country. By establishing a robust distribution network in emerging markets, insurance companies can effectively cater to this segment.

To successfully distribute insurance products in these markets, various channels need to be developed. This includes traditional channels like agencies and brokers, as well as partnerships with regional NBFCs (Non-Banking Financial Companies), regional cooperative banks, and agricultural societies. A diversified approach is necessary to get across to these markets successfully and provide insurance coverage to the underserved populations in rural and emerging areas.

Revitalizing the Insurance Landscape

Mr. Agarwal acknowledges the recent reforms introduced by IRDA and highlights their significance. He mentions the following key reforms:

• Bima Sugum App: The launch of an app provides a convenient platform for individuals to purchase various types of insurance policies such as motor insurance, health insurance, and travel insurance. This digital platform has the potential to be transformative, similar to the Unified Payments Interface (UPI) in the banking sector.
• Expansion of Corporate Agents and Insurance Marketing Firms: Previously, corporate agents could work with a maximum of three insurance companies, and insurance marketing firms could work with two insurance companies. The reform now allows them to work with up to nine and six insurance companies, respectively. This expansion enhances market access for these intermediaries, fostering greater competition and consumer choice.
• Rural Penetration Initiatives: IRDA has allocated states to insurance companies to focus on increasing penetration in rural areas. A specific product called “Bima Vistar” has been introduced, which combines life insurance, critical illness insurance, accident insurance, and property insurance. The recruitment criteria for intermediaries called “Bima Vahak” has been broadened, allowing individuals with a class 5 pass qualification to become agents. This reform is expected to significantly increase insurance penetration in the rural market.
• Expense Management and Commission Guidelines: IRDA has introduced expense management guidelines and revised commission guidelines for insurers. The guidelines provide a single expense management limit of 30% or 35% (without sub-limits for each business segment) based on the type of insurance business. These guidelines promote ease of doing business and are expected to improve insurance penetration.
• Use and File Guidelines: Previously, every insurance product had to be filed with the regulator for approval before it could be used in the market. The reform now allows self-approval by the internal committee called the Product Management Committee, enabling insurers to use the product and subsequently file it with the regulator. This change streamlines the product approval process, facilitating faster product launches.

These reforms aim to enhance the insurance sector’s ease of doing business, promote competition, expand market access, and improve insurance penetration, both in rural areas and across the country.

Fostering Growth and Enhancing Social Welfare

Mr. Agarwal expresses optimism regarding the future growth of the insurance sector in India. He acknowledges that the current insurance penetration in the country is relatively low compared to middle-income and poorer countries. However, with the recent reforms and anticipated future reforms, he expects insurance penetration to increase significantly.

The insurance sector in India has shown an average growth rate of around 16% over the past two decades. With the recent reforms and the potential for further reforms, Mr.

Agarwal believes that the growth of the sector will accelerate. He emphasizes the importance of increasing insurance penetration in India, as the country has been recognized as an underinsured and under-pensioned society. By improving insurance penetration, the social welfare of the community can be enhanced.

ICICI Lombard is well positioned to capitalize on the recent reforms and contribute to the growth of the insurance sector. The company will continue to launch new products, expand its distribution network, and invest in technology to serve its customers better.

The focus will be on providing customers with ease of doing business, streamlined claim processes, and making a marked positive impact in their lives.

Empowering Emerging Leaders in the Insurance Sector

Mr. Agarwal advises emerging leaders in the insurance sector to approach the industry with a mindset that focuses on serving people, particularly those in distress. He emphasizes that profitability and growth potential should not be the sole considerations when entering the sector.

Instead, aspiring leaders should also evaluate the social impact they can make and their willingness to create that impact.

Having a strong technological foundation is crucial in the insurance sector, as it involves working with large amounts of data. Therefore, emerging leaders should be technologically proficient and well-versed in data science. Additionally, Mr. Agarwal highlights the importance of empathy towards customers, as they typically seek insurance assistance during difficult times. Leaders should prioritize serving the needs of customers rather than solely pursuing profits.

A Visionary Leader

Alok Agarwal graduated from IIM Calcutta in 1993 and began his career at ICICI Bank, focusing on corporate finance for eight years. In 2001, he joined ICICI Lombard, where he has remained ever since. His work at ICICI Lombard has primarily been in corporate and government business, with a brief stint in overseeing the SME sector. Recently, he has been involved in the retail business, specifically targeting emerging markets beyond 20 cities for motor insurance and beyond 40 cities for health and SME insurance.

During his 30-year tenure with the ICICI Group, Mr. Agarwal has witnessed a remarkable growth in both the industry and the company. The general insurance sector, which had 10,000 policyholders when he joined, has now expanded to over

32.7 million policies as on March 31, 2023. ICICI Lombard itself has achieved a premium of approximately 20,000 units, reflecting the industry’s evolution.

Initially, the general insurance sector had four public sector companies and two niche companies like IRCTC. Currently, there are 31 companies in the sector, with pending licenses awaiting approval from IRDAI. This significant growth reflects the industry’s rapid expansion and notable changes.

Health insurance has undergone a substantial transformation over the past two decades, becoming the largest segment in the industry and surpassing motor insurance. Technological advancements have played a significant role in shaping the industry during Mr. Agarwal’s active involvement.

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