India is on track to become the world's third-largest economy. Munich Re wants to cash in on the strong growth in the country's insurance market, the CEO of the company's India branch, Hitesh Kotak, told DW.
DW: What is the current state of Munich Re's business in India?
Hitesh Kotak: Munich Re has been engaging with clients in the market since 1950. With recent changes in the regulations on both the direct and reinsurance side, we set up the India branch in February 2017. As the first foreign reinsurer to be granted a licence by the Indian regulators, we have a long-term commitment to building deep client relationships, and have been servicing all clients and all lines of business, with a focus on new business opportunities in sectors like cyber and renewable energy.
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Among the foreign reinsurers in India, we have one of the largest teams of around 60 staff, comprising non-life, life & health and shared services. With local representation of all functions, we are able to respond with agility to client needs, through our talented local team members, who combine a rich local market understanding with our global capabilities.
What makes India special when it comes to the insurance sector?
The Indian market is currently experiencing one of the most exciting development phases we have ever seen, and it is no surprise that India's insurance market continues to enjoy double-digit growth, with motor, health and crop having the largest portfolios in the market.
With its current population of 1.3 billion growing at a rate of 1.02% annually, India is expected to overtake China as the world's most populous country by 2027. More critically, almost 65% of its population is less than 30 years of age. Combined with a GDP that is growing at a healthy rate of 6-7%, India as a market presents a unique opportunity for businesses.
The government is playing an active role in developing the insurance sector. It has converted its crop support scheme to an insurance-driven scheme and is working on a health insurance scheme for the poor and uninsured. There are also digital initiatives to distribute insurance products and drive process efficiency, cost management and service delivery. With low insurance penetration levels, there is significant growth opportunity for the sector in the coming 5-10 years.
What kind of products does Munich Re already offer in India and which insurance products do you plan to introduce there?
Munich Re is known for offering products that span across traditional property and casualty as well as life and health lines of business. We have been doing this for years in the Indian market. On the property and casualty side, we have three broad offerings: There are traditional products like property, engineering, liability, personal accident and motor, among other things.
Then, there is agricultural or "agro" reinsurance: This is fast becoming an important factor in our overall market proposition. We are not just another capacity provider, as we believe that in India, agricultural insurance will continue to be a very big requirement among clients. There is a need to use the latest technology — not only to reach out to the insured, but also in product design, claims monitoring and performance forecasting. We have created a dedicated agriculture-focused unit comprising two agro scientists, agro specialist underwriters and actuaries, dedicated to developing tools for the market to help clients manage their agro portfolios efficiently.
With more than a billion people, India has one of the fastest-growing economies worldwide. We are not only growing in traditional sectors, but we are leap-frogging generations of technology. This has had a positive effect of learning and development: It has opened up new opportunities while exposing our industries and people to never-seen-before threats. We are working with insurers and other partners in the country to deliver new products and solutions for the market. One such product is cyber insurance for individuals, which has been well received in the market. We are also developing solutions for the Indian market in the area of renewable energy, as well as personal line solutions for digital channels.
Where does Munich Re see the biggest growth potential in India?
The most significant growth potential lies in crop, cyber, renewable energy and health and other personal line solutions.
Are there any new products you have in the pipeline that are customized for the Indian market?
We are keen to introduce global solutions to the Indian market, and help develop the market, support Indian customers to achieve better risk management and be aware of the exposures that can hamper their business. As Indian businesses are now more global in nature, they are exposed to global risks in terms of digital, cyber (personal and commercial), renewable energy, health and crop. With our experience in risk management and mitigation across the globe, we are well placed to support our customers in India.
Hitesh Kotak is the chief executive officer of Munich Re's India branch.
The interview was conducted by Thomas Kohlmann.