He is a CEO with difference going by his sheer skill sets ranging from Risk Management to Insurance to Business Development, Change Management, Strategy and of course Creative Writing. It is his prolific creative writing that sets him apart from his professional pedigree. His powerful writing and thought process, often out of box leave indelible imprint on his readers. Extremely articulate, Praveen Gupta is known for immaculate presentations in international seminars and workshops. In one of his write up-“Diversity: Why Bother?” he touches upon the topic of diversity beautifully and writes subtly that Diversity and Inclusivity (D&I) is one mantra that will reverse the dysfunctionality and hopefully endear insurance to a wider base. His writings often fire up the imagination and propel his readers to think differently.
Praveen has a distinguished career. A proven professional , he has been at the helms of affairs as MD and CEO of Raheja QBE General insurance since May 2008 ; was General Manager – Corporate and Broker Relations –Bajaj Allianz General Insurance Co. between 2001 and 2008– Headed Marketing Development –CGU General Insurance/General Accident PLC between 1998 and 2000 ,U.K. Joined New India Assurance Co.Ltd., way back in 1979 and headed the company’s Thailand and Hong –Kong operations.
Praveen received his Masters in History from prestigious St.Stephen’s college, New Delhi and is also a Fellow of Chartered insurance institute. He is also a Chartered Insurer. He also won the coveted D Subramaniam Award and S K Desai Memorial Prize respectively.
A thorough gentleman – he is modest to a fault.
In an Interview with Dr Rakesh Agarwal and Dr Abhijeet Chattoraj, Mr Praveen Gupta candidly spoke about various issues pertaining to Insurance Sector. Here are the excerpts of the Interview.
Q: Your overseas partner QBE Insurance Group had a presence in India way ahead of the nationalisation of the Industry. Could you please share the brief history of you partner as well as on your current partnership?
A: ‘North Queensland Insurance Co (‘Q’ in the QBE) arrived in India way back in 1888. ‘Bankers and Traders’ (‘B’ in the QBE) too had a representation here. NQI, headquartered in Calcutta, was merged with United India Insurance Co. Ltd. at the time of nationalisation.
Our current J.V. partner Prism Johnson (in the business of manufacturing cement, tiles and ready-mix) is a part of an exceptionally diversified set of businesses. Some of the prominent brands being Exide Batteries, Exide Life, Sonata Software, Outlook Publishing, Asianet and Hathway Investments.
Q: Unlike other peers, you focus on a different distribution model?
A: Indeed. Here are my thoughts:
- We prefer to be a manufacturer and not a distributor.
- The recent evolution of this market saw the arrival of multiple distribution channels in close proximity. Thereby the distinct value proposition of respective channel went amiss.
- As a late mover we had the hindsight of the resultant channel conflicts and channel cannibalisation. We chose to stick to broking as a preferred means of distribution. That also worked very well for our initial focus on the corporate and commercial lines.
- Thankfully, brokers are significantly differentiated today and beginning to play prominent role in the retail space, as well. Something that we are excitedly exploring.
Q: What have been your recent product launches?
A: Our current focus is on the cyber space. The resulting recent solutions being:
- Cyber and data security insurance
- TechPro Complete Liability
Q: Do you think Risk Management as a concept and as a practice is fading into oblivion just because to get business at any price?
A: Yes and No! I am not an apologist for the erstwhile tariffs. Unfortunately, they were withdrawn without putting any safeguards in place. Today you enjoy the lowest possible price notwithstanding your loss history or risk quality. I am aware of cases of Fire insurance where clients dismantled fire protection system and sold it off because there was no incentive to maintain or retain them. FLEXA perils attract no premium. Insurers are willing to discount terrorism and other extraneous perils. All attempts to impose bonus/ malus or bring in ‘burning cost’ have failed. Aggregates and accumulations are not addressed with the gravity they deserve.
Our experience shows that there is an emerging generation of millennials that is concerned about risk management rather than just risk transfer. For them the brick and mortar risk is not as much a threat as reputation is. We are in the throes of change. I believe in the long run technology will increasingly make risk transfer less relevant than risk mitigation and prevention. However, in the short to medium term – regulatory disciplining in pricing, reserving and not just vanilla risk management but ERM, as well, will need to go up. Needless to mention, serious governance from promoters of insurance business will also clear the irrational exuberance resulting from valuations rather than pure underwriting performance.
Q: How are the new technologies like Artificial Intelligence and Block chain going to disrupt the insurance industry?
A: As of now the FinTech space is seeing major disruptions and serious observers believe it can replace traditional banks. However, on the InsurTech space it is still a very complimentary equation. Yet the biggest threat from Cyber world to insurers is very existential. While these technologies will bring in overall efficiency, transparency and speed – they are not a panacea for the trust deficiency. We can hear increasing sound bites on ‘premium and claims optimisation’. This is something which is bound to fuel regulatory and customer activism.
Despite a lot of noise being generated – the likes of Lemonade, Brolly and Zhong An – are a signal enough to the impending global transformation underway. Lemonade, in the US, has recently introduced an open source policy. For the first time ever a customer can ‘co-create’ an insurance product! I believe, howsoever, simple as it might seem – this is an inflection point in the evolution of insurance and also in the extinction of old ways of transacting insurance.
None of my visits to Kolkata are complete without meeting the doyen of our industry, Mr. A C Mukherji. He particularly reminds you that with premiums having gone to such low levels the impact of new business acquisition tends to be insignificant. On the other hand the impact of claims is on the rise. With growing values and coverage the focus should in no way be any less on the claims side. Insurers, therefore, need to equally manage this front too by leveraging evolving technology.
Q: Apart from the traditional products which lines of business do you believe will be in demand in the times to come?
A: Cyber could become an overarching or underlying cover as individual lifestyle and businesses increasingly get driven by technology. Across the spectrum anything everything that touches cyber or is touched by cyber – is likely to be packaged together. Connected Insurance will soon become the buzzword. ‘Eventually all insurance business will be InsurTech business’, to quote Matteo Carbone, a thought leader on the subject.
Q: Of late government has been pushing hard for reforms in the insurance sector particularly in Crop and Health insurance. What impact do you foresee for the growth of insurance sector?
A: Currently these portfolios are very fragmented. Given the inefficiencies involved they are expensive to service. Nevertheless, these two would account for the two largest lines of business. Being extremely sensitive in nature, the customer aspiration will grow and become very demanding. These will no longer be just a top line, cash flow mechanisms. Technology applications across the eco-system would eventually make the customer journey less bumpy.
Q: Training, learning and continuous professional education is the key for the growth of any industry. What are your efforts in this regard?
A: Over the years we have worked very closely with the Insurance Brokers Association of India (IBAI). We organize regular product training sessions for all our partners; our market events, more recently, under the banner of Raheja QBE Leadership Series have been very well received. The focus of these is solution centric and around risk transfer rather than product specific. Perhaps per capita, given our size, our contribution to thought leadership is one of the highest (both spoken and written) – this is something that really does us proud. We also work very closely with young minds at leading learning institutions and professional bodies. We are a knowledge industry and a good part of our effort goes into not just stimulating learning but also growing the market.
Q: Online selling of insurance products is gaining momentum. How far do you believe the online channel would be successful in general insurance industry?
A: This entails several undercurrents:
- Commoditised products both B2B and B2C will have a full cycle of online sales and service delivery
- Embedded products could be easily serviced
- Specialty retail will be no different from the other two. However, corporate commercial classes will require informed buying/selling. The pre-sales prospecting may be possible online but servicing will surely become much more efficient.
Q: Your views about the need for research and development in innovation of products and services?
A: There are lots of bright young minds applying themselves in mainstreaming insurance, in making the entire journey from what to buy, where and when to buy, renew and how to claim – rather easy. ‘It’s always all about the customer! Collaboration: The Future of Insurance. Engage. Educate. Inform. Advise.’ – Lois Rogers, CEO, Claims Maid. The intensity and the scale of this work are largely happening outside the realm of the traditional insurers. Only time will tell whether the incumbents will be the disruptors or the disrupted!
Q: Any other development that you would like to share?
A: Yes please, here are some:
- Cyber could become an overarching or underlying cover as insurance transforms into a tech business. Across the spectrum anything everything that touches cyber or is touched by cyber – could be packaged together
- Insurance by its very nature ought to have been a horizontal business but chose to operate in silos. Thanks to cyber, here is an opportunity to ‘horizontalise’
- Climate change, conduct risk and behavioral science are areas to watch out, as they increasingly influence our business.