GIC Re: spreading its wings beyond India

The company has backed the creation of a reinsurance hub in India—why do you feel this is needed?

India has immense untapped potential in the area of insurance penetration. To exploit this latent potential we need to give a massive boost to the insurance infrastructure in the country. We need an enormous amount of capital, expertise, better underwriting practices and also technical knowhow. We need a catalyst to kick-start this entire process.

This is happening but it needs to happen on a much larger scale and a much faster pace. This will be accelerated if we are able to get the best of the global insurance industry to come and set up base here. Today, GIC Re is moving beyond the Indian shores and we welcome others here. It will give a boost to the overall growth of the sector.

India has the infrastructure to form a reinsurance hub. It is an accepted fact now that we have much to offer the international insurance community: a strong and just judiciary, a young and prosperous middle class and well educated technically qualified people.

As GIC Re spreads its wings into new markets what have been your successes so far and what markets might you target next?

We are moving beyond our shores and to begin with we are looking at our immediate neighbourhood and close proximity. Insurance is a cross-border business that needs to move across geographies for the very simple objective of achieving the spread of risk. Our strategy has been very clear in this regard.

Today, almost all Asian countries have a low insurance penetration. They are of course emerging economies and attracting global attention and economic development but the insurance sector is still to achieve a standing of its own in most of these countries. It needs expertise in all respects to achieve growth and contribute to that country’s overall progress.

So, while we contribute to their progress we also expand our base. And we have been reasonably successful in this regard. We are leaders of the majority of the reinsurance programmes in most of the SAARC countries, Middle East and Africa.

GIC Re is a respected organisation in these regions and an established brand name. During the course of the next year we plan to strengthen our presence further in countries like Nepal, Bangladesh and Sri Lanka. We are also looking at possibilities in South Africa. We are already present in Bhutan in a joint venture reinsurance company.

As the influence of the Indian economy in the world grows, what will that mean for its reinsurance sector?

Today, the temporary slowdown notwithstanding, the Indian economy has very strong fundamentals. A massive investment in infrastructure is already in place and much more is on the cards. We have a growing prowess in the region that is attracting international investment and leading players in various sectors. This promotes confidence in us and a sense of dependability develops. All these sectors need insurance and insurance in an emerging market such as India needs a creditable reinsurance support.

Being an established and trusted player in the industry, we will grow too. With a 1.3 billion population and a young demographic profile, there is tremendous scope for retail business as well. Reinsurers with deep pockets will be required to meet capital requirements.

What are the key challenges facing the company at the moment?

In the Indian market, the mandatory cessions of 20 percent have come down over the years to 5 percent now. The industry that was continuously on the upswing over the last 12 years is showing a slowing down. Hence, to not only maintain our top line at the current standards but to achieve growth too would be our greatest challenge in the short term. And of course, this would have to come with a ‘no compromise on the bottom line’ caveat. As I said earlier, the right pricing will be the differentiator in this regard.

How important are international reinsurance conferences such as Monte Carlo to you?

Both Monte Carlo and Baden-Baden feature as permanent events to be attended in our calendar. They help us meet our business partners and exchange notes which then largely helps us in formulating our own business strategy for the January 1 renewals which are around the corner.

Baden Baden, which falls later, is an excellent place to set the tone of the renewals as the data and the figures start being crystallised with three quarters having elapsed. Needless to add, the cementing of old and the creation of new relationships almost inevitably happens in these conferences and is consequently looked forward to by the insurance/ reinsurance and broker fraternity.