Stretching its wings: GIC Re
While retaining a robust market share in its home of India, GIC Re is increasingly competing on the international stage. Devesh Srivastava, general manager of GIC Re, explains its strategy.
“Our costs of operations and compliance are quite low and this is a significant advantage.” - Devesh Srivastava
How does the size of the domestic book compare with your international business?
Our book had a balance of 71:29 for the domestic and international books during 2017/18. Just a couple of years ago this ratio was 55:45; thanks to extraordinary growth of the domestic market, the balance has tilted in favour of the domestic. With domestic market growth becoming relatively muted and our expansion plans kicking in, we hope to achieve 60:40 in the medium term.
What opportunities for growth do you see overseas?
During the year 2018, GIC Re set up a syndicate in Lloyd’s of London: GIC Re 1947. This will give us a global platform to access business with broader base. This will help the corporation leverage the Lloyd’s platform to access business from a globally reputed platform that enjoys an excellent credit rating.
This will significantly enhance GIC Re’s profile and facilitate access to other markets in terms of setting up physical presence.
We are open to exploring opportunities in different geographies. Our plans to operationalise a subsidiary in Russia are well under way to cater to former Soviet Union countries.
What is your biggest advantage when competing internationally?
Our strong and large balance sheet reflected in our global ranking provides us with the capacity to provide sizable capacity and lead global reinsurance placements. This gives us the flexibility to be able to provide solutions to clients in a meaningful way.
We have a philosophy of staying with the markets with the long term in view rather than opportunistic short-term partnerships. Our clients recognise this. As compared to the mature markets, our costs of operations and compliance are quite low and this is a significant advantage.
The Indian investment climate is another positive insofar as it provides us with a leverage to absorb some level of underwriting losses.
What are the biggest challenges you face?
To effectively surmount their problems, many insurers are investing technological solutions that improve front-end sales, distribution and customer service, and enhance back-end operational efficiency and expense management. If one word could sum up the focus of insurers in 2018, it is ‘technology’.
Many insurers are investing in digital platforms that strengthen their relationships with customers across all product classifications and geographies. The goal is to empower both businesses and consumers to better shop for insurance, making products more transparent, easier to understand and compare.
Helping clients with advice in the areas of underwriting and claims, as well as customised reinsurance solutions that address their risk and capital management needs, will be the decisive factors for success.
In addition, these factors will be key to providing significant capacity across all lines of business, innovative products and top financial security to clients.
What is the bigger opportunity?
I do believe that at a macro level, the insurance industry is ripe for technological disruption. Insurers around the world are struggling with a myriad of challenges: low levels of consumer trust, much competition, a low interest rate environment, shrinking profitability and legacy IT issues.
Addressing these challenges may be tough but it will also create opportunities for growth in the insurance industry in the years to come.
As India plays catchup in terms of economic convergence and leapfrogging in insurance penetration, the future of insurance and reinsurance in our part of the world is bright. With the S-curve coming into effect, climate change presenting challenges, and resilience goals being embedded into global macroeconomic policymaking, insurance will continue to provide a useful risk management tool alongside risk financing.
Devesh Srivastava is the general manager of GIC Re. He can be contacted at: devesh@gicofindia.com
