Interview with Mr. Ritesh Kumar, MD & CEO, HDFC ERGO General Insurance

Analytics capabilities would nudge the industry towards usage-based insurance in days to come

He has been at the helm of affairs of one of India’s leading and most admired private insurance companies for close to one decade and during these long years, he has established himself as a leader par excellence. He always acquits himself with aplomb and dignity.

Ritesh Kumar, the suave and elegant MD & CEO of HDFC ERGO General Insurance Company is a veteran of financial services with over 26 years of experience. He spent the initial 10 years of his life in Banking and the remaining 16 years in Insurance. The journey of his illustrious career began in 1992 as a corporate banker. During his stint in Banking, he was associated with funding of projects across Manufacturing, Infrastructure and media sector. He was also keenly involved in some of the earliest securitization deals in India.

At the turn of the millennium, when the Insurance sector opened up, he made a calculated move to switching from Banking to the General Insurance industry. He took over the rein of HDFC ERGO in early 2008. He graduated in Commerce from the prestigious Shri Ram College of Commerce, Delhi and holds an MBA degree from Faculty of Management Studies (FMS), Delhi.

A fitness freak, he is also known for his culinary exploits.

Ritesh Kumar touched upon various issues of GI industry and shared little known secrets of his life so far in a lively conversation with Prof.(Dr.) Abhijit K. Chattoraj.

Your views on factors driving GI business in India in days to come…

The Indian general insurance industry has been growing at a CAGR of 18% over the last 17 years, but continues to be under-penetrated in India. This low penetration, coupled with our strong economic growth outlook and favourable demographic dividend, implies that there is significant potential for growth in the Indian market. New risks, such as cyber risk, continue to emerge which further comprise growth opportunities.

At the same time, IRDAI has been undertaking various steps to improve insurers’ access to reinsurance capacity, capital and to deepen distribution reach. Coupled with availability of richer data from KYC and increased adoption of analytics, all these factors together should result in insurers being able to provide better insurance solutions to the customers, thus building a win-win situation for the customers and the industry.

Customer engagement is going to be an uphill task in days to come particularly while dealing with the needs and the aspirations of the Millennials and Gen Z.  How are the GI companies going to tackle this problem ?

On the product side, customers are increasingly looking for

  1. Products which are easy to understand
  2. Insurance covers for emerging risks

The industry is moving towards simplified product wordings, standardised risk covers for retail risks, and this reduces complexities in product design. At the same time, we have witnessed various instances of insurers launching innovative products to cater to emerging risks, which results in better coverage and improved insurance penetration. For instance, we have launched products like Cyber Security Insurance, Inherent Defects insurance policy, Solar Energy Shortfall Insurance Policy and Title Insurance Policy to cater to new risks.

Hence, coping up with the needs and aspiration of the Millennial and Gen-Z will only help improvise the products and service expectations which will create a win-win for the customers and the industry. How would the GI companies in particular and the insurance industry as a whole embrace the cultural changes and disruptions in terms of culture, people ,thoughts and technology in days to come?

On the service front, timely and excellent service continues to be the service mantra. Increasing adoption of digital solutions augmented by the extensive use of analytics-driven insights is shaping the service architecture of insurance companies. This ensures that high quality service standards are delivered to the customers and drives efficiencies among insurer operations, again resulting in mutual benefit.

For example, we continue to explore new age technologies and invest in AI and Big Data Analytics, providing our customers with a fully digital experience. Our Insurance Portfolio Organiser (IPO) App, DIA – our AI Chatbot on Amazon Alexa and Google Assistant, Motor Self-Inspection App, End-to-End Motor Claims App, Overnight Vehicle Repair Service, HDFC ERGO Community portal ( are offerings poised to provide value-adding opportunities to our customers.

Do you believe GI industry would gravitate towards usage -based insurance in days to come? Is there any such possibility in health and automobile insurance, altering the current practice of underwriting these portfolios ?

With the advent of technology, we are adopting digital solutions in all walks of life – be it wearable devices to track our health records, or Telematics to monitor our driving patterns. As more data become available, insurance companies continue to augment their analytics capabilities. This is likely to nudge the industry towards usage-based insurance, one where as many individual risk factors are available and relevant are considered in pricing and in underwriting the risk.

HDFC ERGO General Insurance Co. Ltd., right from the beginning, has been a well aligned and culturally strong company – How have you managed to stay afloat despite turbulent time. I mean what are the key pillars of your organization culture that guide you to excel?

Our vision is “To be the most admired insurance company that enables the continued progress of customers by being responsive to their needs.” This vision guides us in earning the respect of both – our customers and the industry at large. In doing so, we are guided by our values – SEED: Sensitivity, Excellence, Ethics and Dynamism – which has taken us closer to achieving our vision.

Our culture is shaped by our ethical approach and our values. Imbibing this approach and our values in our employees are key in nurturing our organisation culture. Also, our high levels of integrity enable us to ‘continue the tradition of trust that we inherit owing to our HDFC and MunichRe parentage.

Profitability remains a major concern for most GI companies all over the world. From India’s perspective, by what percentage point, according you, the underwriting margin needs to be improved to allow the Indian GI industry deliver an acceptable ROE (Return on Equity) to investors in future?

‘Acceptable ROE’ is quite a subjective term. If one attempts to calculate, assuming an underwriting margin of 1 to 2 percent and 7 to 8 percent investment yield coupled with investment leverage (investment portfolio / net-worth) of 3 times, this leads to a post-tax ROE of approximately 18 to 20 percent, at an industry level average. But, as against this, the underwriting margin for FY18 was -9%. Thus, the margins need to improve by approximately 10%.

The defining moment of your life….

The decision to move to Mumbai from Delhi in 2002 as I was coming out of my comfort zone and then switching my career from banking to insurance. By taking over the stewardship of HDFC ERGO, I took a conscious risk-knowing fully well that a failed CEO has no taker. It is very difficult for professionals to bounce back .Most of them have no choice but turn to by- lane entrepreneurs. It was a huge risk looking in hindsight.

How do you keep yourself physically fit ?

I love running and participating in half marathons and stay away from self-created stress.

Any regret …

I love cooking but I hardly get time now-a-days.

What keeps you going – I mean what is your mantra of success…

Look I always try to be a student. You need to keep yourself abreast with the latest things-mind it so much is happening around you. I believe in both learning and unlearning and try to maintain a flexible mindset. Possibly this has worked for me. Please remember no mantra is consistent .The rule of the game keeps changing. I believe leadership is a function of the team and function of the trust it reposes.

How would you love to be remembered..?

As a passionate professional, who in his little way tried to make sense of things and one who also left- a legacy of a successful organization.