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N. Mohan: Do you think the Indian insurance companies – especially those in the public sector – are ready technologically and in terms of skillsets to adapt to the digital world for insurance selling? Some of these companies are still struggling with legacy systems and have not even fully implemented the core insurance solutions?

Alpesh Shah: Life insurance business in India is in the toughest position it has ever been in over the past two decades. There are two major reasons for this. First, during the last five years the business has remained static and there has been hardly any growth. Secondly there have been several regulator y changes that largely impacted insurance products and distribution channels, which specifically made it very difficult for life insurers to achieve growth. When we look at the insurance industry as a whole, until 2001, there was just one player – LIC. In 2001, the government allowed 8 private players in the industry. I will say the period from 2001 to 2008 has been the golden period for the life insurance sector, when life insurance business as a whole saw some 30%+ growth. LIC too recorded substantial growth and it had some 65% of the total share of new business. However, during the period 2008-2013, the sector had the worst experience when growth was virtually nil. The reasons again were two: the economic downturn of 2008-2009 and absence of any innovation in product or distribution system, which in turn forced customers to look at alternatives including fixed deposits, real estate, etc. This period also saw some of the insurers cutting down on their business exposure and even quitting the domain.

There is an interesting contrast here. During the 2001-2008 period, when life insurance sector flourished, the non- life sector was slow. But during the 2008-2013 period, when life insurance companies stagnated, non-life insurance players put up a creditable performance. T he y scaled up their oper a tions, introduced niche products that attracted customers and extended their reach beyond the metros and in the bargain achieving 20% growth YOY.

One encouraging aspect as I see the insurance sector today is that life insurance is likely to see 10-12% growth over the next 5 years and is also likely to grow, albeit single digit during 2014 – 15 as well. And non-life sector is likely to continue to grow at 18-20% with substantial profitability, and will be in a better position compared with the life insurance business.

Coming to your question whether Indian insurance companies are ready technologically and in terms of skillsets to adapt to the digital world for insurance selling, my frank answer is no. There may be exceptions, especially among the private sector players but as a whole the sector has to go a long way. This is mainly on account of the mindset that prevails. I feel in spite of the technological advances and advent of modern business practices, the insurance industry as a whole has not changed. There is a strong need for change in the organizational culture that prevails. Secondly, there is the isssue about legacy. India is placed in an advantageous position as there is hardly any legacy system in the insurance sector. I will say that the legacy is in the mind.

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