Optima Insurance Brokers Pvt. Ltd.

Emerging Asia is likely to be the engine of growth for the world economy in the coming years. With the China’s economy reopening again this year, Emerging Asia to grow by 5.4% in 2023/24 due to recovery in demand. However, inflation still remains the biggest global macroeconomic concern, inducing hard market conditions in non-life business prompting insurers to offset elevated claims costs with higher premium prices.

As per an estimate, global economic growth will be lower at 2.3% this year and 2.3% in 2024. This growth is majorly contributed by emerging Asian markets, wherein countries like India, Thailand, Indonesia and Malaysia are likely to grow much higher. With China coming out of the lockdowns in December last year, it is forecasted to register stronger growth this year than in 2022, pegged at 5.4%.

Insurance industry’s profitability in the world is set to improve with global insurance premiums, both in non-life and life, are estimated to grow by 1.1% in 2023 and by 1.7% in 2024. The premium amounts are forecasted to touch a new peak of $7.1 Tn in 2023, as compared to $6.8 Tn in 2022.

The Non-life premiums in emerging Asia are estimated to expand by 6.7% and 6.2% over 2023 and 2024, whereas life premiums are set to grow by 5.0% and 5.4%.

This year Non-life business is likely to be supported by better pricing, with Non-life premiums for China and emerging Asia forecasted to grow by 6.8% and 6.6% respectively.

IRDAI has advised all insurance companies to promptly inform cyber security related incidents, as it came to know that many insurers were not adhering to the timelines and compliance in reporting such communication with Cert-In, vide a circular dated June 13, 2023.

Insurers are required to report cyber incidents to Cert-In (Indian Computer Emergency Response Team) within 6 hours of noticing or being notified about cyber-attacks, with a copy to IRDAI and other designated regulators and authorities.

Insurers must refer and follow the IRDAI Information and Cyber Security Guidelines for reporting purposes and submit necessary details in a prescribed format within 24 hours, to be updated with forensic analysis and any new information.

This will enhance cyber security and develop a secure environment for the policyholders and insurance sector, by prompting a swift response to prevent further damage and mitigate risks. Any failure to do so could invite penalties or regulatory consequences for the insurers.

Indian domestic insurance market is set to witness IRDAI’s path breaking regulatory reform with the regulator considering the feasibility of allowing managed general agencies or MGAs into the insurance market.

At present, MGAs do not operate in India, but IRDAI is considering their participation favorably in continuation of discussions being held with large insurance intermediaries. This positive step would allow current insurance intermediaries like Policybazaar, and others, who are focused only on distribution, to play a bigger role in the design of insurance products and life cycle management of the customer.

The entry of MGAs will open up opportunities for new-generation tech companies in partnership with large insurance companies for risk-sharing, underwriting business, wider use of technology, and offering customized insurance products in areas where the insurers does not have presence.

Cyclone Biparjoy made landfall in Gujarat on 15th June, causing extensive damage to the residential properties in the coastal region. Majorly, the insurable losses happened because of flood rather than wind damage. An estimate by CoreLogic, a global property solutions provider, puts total insurable losses from Cyclone Biparjoy at less than $ 100 Mn.

This estimated insurable loss comprises damage to residential, commercial, agricultural, and industrial lines of business and excludes infrastructure damage to utilities, transportation, and communication systems.

IRDAI has advised General insurers and standalone health insurance companies to appoint a nodal officer, 24×7 helplines, and special claims desks to process claims faster and release interim payments for restoration of property or businesses, wherever possible to use digital processes.

Zurich Insurance Group is holding active discussion to buy up to 51% of India’s Kotak General Insurance, a deal that would be Zurich Insurance’s first big bet on the fast-growing insurance market in South Asia.

Uday Kotak, Asia’s richest banker, backed Indian company is valued at around $ 800 Mn based on the early-stage negotiations. Zurich Insurance has shown a keen interest in a minority stake of 49% or a majority of 51% and secure the deal for the Swiss insurer by paying $ 400 Mn for the transaction.

Kotak is yet evaluating offers, including from other investors, but prefers to retain “control of the company” post-sale of the stakes. It is hoping to get an investor who can help them turn around the business and grow faster.

Zurich, one of Europe’s largest insurers, and Kotak General Insurance, fully owned by Indian banking giant Kotak Mahindra Bank have not yet made any official confirmation about the stake sale. In 2021, India’s insurance sector was liberalized by allowing foreign companies to acquire majority stakes of up to 74% in an Indian insurer, from 49%.

The Insurance regulator of India, IRDAI is in the process of implementing its vision of “Insurance for all by 2047” by rolling out lead-insurer system and promote accessible and affordable insurance. Zuno General Insurance (formerly Edelweiss General) is one of the insurance companies being appointed under the system.

Zuno has got a mandate from IRDAI to be the lead insurer in the state of Goa and enhance insurance reach and accessibility, with a focus on life and health protection, natural calamities, MSMEs, and employment. Zuno has specific plans for target groups like fishermen, rural and women self-help groups, MSMEs, and uninsured vehicle owners.

As per Zuno, Goa’s literacy and poverty rate indicates potential for increased insurance awareness, with Motor insurance dominating the market, followed by fire, property, and marine cargo insurance.

Prominent lead insurers include Universal Sompo General Insurance, Star Health and Allied Insurance, and Aegon Life Insurance, for the state of Andhra Pradesh. SBI General Insurance is the designated lead insurer for Meghalaya, a state in northeastern India.

Lead-insurer system for a state is a novel concept introduced by IRDAI to increase insurance penetration and drive financial inclusion. Its implementation is monitored by a coordination committee, including the insurers, state government and IRDAI representatives.

To address the grievances related to health insurance in India and further strengthen the confidence of consumers, participants of a national health insurance summit have demanded to establish an independent high-powered health insurance grievance redress tribunal.

The two-day event, “National Health Insurance Summit – 2023,” was planned together by the Hospital Board of India, General Insurance Council, Indian Medical Association (IMA) Tamil Nadu State Branch (TNSB), insurance companies, 3rd party administrators, IMA’s Nursing Home Board and Insurance Committee of Tamil Nadu, and IMA Coimbatore.
The sole purpose of this tribunal should be to address grievances and disputes in a fair and transparent manner, delivering fast and effective resolution for health insurance providers to provide much needed medical care to the patients.

The event called for empanelling all eligible hospitals and developing a hassle free single window system, for methodical costing of healthcare services, and much improved collaboration between hospitals and insurance companies.

It also emphasized on the involvement of IMA and doctors’ associations in policy-making bodies of the health insurance industry and the government.

Indian Insurance Regulator is planning to launch a bundled product that will cover life, health, casualty, and property insurance in a single policy at a reasonable price. This product is being developed along with the General Insurance Council and Life Insurance Council of India.

The product design focus is to develop a parametric trigger, so that there is no need for a surveyor or assessor for loss assessment. If loss occurs or happens, the defined benefit should immediately go to the bank account of the policyholder.

The Bima ‘Trinity’ will include a digital platform, Bima Sugam; a comprehensive cover for the rural population, Bima Vistaar; and a women-centric distribution channel to reach untapped/ rural areas, Bima Vahak with a benefit-based parametric structure.

It was emphasized that Bima Sugam will be the protocol or the platform and Bima Vistar is a product to make insurance accessible to the common man. This bundled product of life, health, casualty, and property will bring out the synergy benefits of Insurance.

The Indian surety insurance market is set to witness a higher growth path as India’s Insurance regulator, IRDAI relaxes norms for surety bonds to increase the availability of such products.

IRDAI has reduced the solvency requirements applicable for surety insurance contracts from 1.875 times to 1.5 times now as per the changes made to the Surety Insurance Contracts guidelines with effect from 15th May 2023. Significantly, the exposure ceiling of 30% has been removed as applicable to each contract underwritten by an insurer.

These changes are in addition to the removal of the cap on premiums underwritten in a financial year for surety insurance business by mono-line insurers.

The reforms in surety Insurance bonds will increase contractors’ liquidity and give an impetus to the infrastructure sector, in particular.