Insuring the uninsured in Rural India: India Inc. Interview
Jaideep Devare is the managing director of Mahindra Insurance Brokers limited (MIBL), a Mahindra Group firm with operations across 30 countries.
Since inception 10 years ago, MIBL has serviced over 4 million insurance cases, largely in the rural and semi-urban markets of India, and has been able to spread its insurance cover across 100,000 villages of India. Innovative products like Mahindra Loan Suraksha (MLS) and Mahindra Arogya Suraksha (MAS) have been specially designed to adapt to rural and semi-urban areas of the country.With its India strategy firmly in place, it is now reaching out to the world to try and achieve a new goal of becoming the first Indian company to be counted among the global top 100 insurance broking firms. India Inc. caught up with Dr Devare during a recent London visit to explore these various aspects.Give us some background on MIBLWe started in the insurance broking business in 2004. It is a relatively new field in the country and our job is to see how we enlarge that market.Since we started out, our strategy has been to focus on the rural segment. The whole business we have been able to create so far has been on that foundation. Mostly companies would go and set up a new business in the urban centre but we took a very different approach, based on our group philosophy of driving positive change.So what we have done in the insurance broking segment is to offer lots of solutions to the underserved customers in under-built markets. In a way, we have been able to enlarge the size of the pie. We have been able to serve over 5 million customers, cumulatively, in those markets in the past 11 years that we have been around.What brings you to the UK market Reinsurance is what brings us to the [UK-based] Lloyds market, which is one of the largest reinsurance market place in the world.So we started with looking at what can be done in India and how do we then become global. In India we are in the top rung. Our vision now is to see if we can be the first Indian company to be among the global top 100 insurance brokers by 2020. That will take us from one of the largest in India to coming to the global 100, which is a big challenge. In that we will essentially delve into how we build a global brand. Mahindra is already a global brand; the group vision for that is to be in the top 50 most admired global brands by 2021.The nature of the reinsurance broking business allows us naturally to move into the global market. We are doing business with about 30 countries, we have relationships developed there.What are the India expansion plans We have been able to cover over 100,000 villages and we would want to double that in the next three to five years. From a market which didn't exist, we now have a full spectrum to reach out to that market. It's a very robust, widely distributed market in India and we are adding a global dimension to that.What are your main challenges There are two challenges we still face. One is that awareness levels are still very low. Second is that once they are aware, how to convince them to buy the products.We brought in innovation in the market by creating some cost solutions which are cost effective, easy to understand and should be innovative. For example, we created some solutions which are credit term insurance products geared to the Indian rural market and those are now being offered to protect people who get loans to buy vehicles like tractors. We felt it was important to protect them to prevent them from going back into poverty. Also, for claims, we have tailor-made solutions like finding proxy documentation to meet practical needs, creating ease for the customer's family.Where does the broad Mahindra Group synergy come in We are able to synergise very well - Mahindra & Mahindra makes tractors and vehicles, Mahindra Finance finances certain portion of it and we are able to create solutions around insurance. So the entire ecosystem caters to that. But at the same time we are an independent company, we are a subsidiary of Mahindra Finance and 15 per cent is held by our foreign partner, UK-based Leapfrog.How do you see the global strategy developing The India strategy is very clear: to focus on the rural segment and protect the SME industry and quasi retail businesses. Also to offer risk management solutions for corporates and insurance companies in India looking for reinsurance support.Internationally, we will reinforce the 30 markets we are in and leverage the Mahindra brand presence in those countries. Here we will largely be working on the reinsurance broking model and Lloyds will be one of the key players in that.We are also looking at certain specific markets in the Middle East and Far East.How do you mitigate risks in an uncertain global climate Reinsurance is one of the biggest opportunities to reduce the risks which are associated with the field. There are two specific risks for any company operating in multiple geographies - liability risk and political risk.The latter is becoming very critical in the global market. Reinsurance is an area by which we are able to bring in solutions to tackle risks. Lloyds is a very specialised market, which brings in tailor made solutions. Our job is to find risk management solutions to overcome global uncertainties. It helps insurance companies improve capital efficiency.How important is foreign direct investment (FDI) in the sector FDI is definitely the need of the hour. The Insurance industry as a whole is capital intensive. The original intention with FDI was also to bring in the best practices from across the world to the Indian market, besides the capital.Digitisation is another element which will help reduce costs and improve customer service.The Indian market remains the largest in terms of potential, because penetration in India is very low. Especially the non-life market, is just about 0.8 per cent. Compared to a market like the UK, which is upward of 4 to 5 per cent. So there is clearly a huge scope to expand the size of the market. With 49 per cent FDI, we have enough scope now for the next few years. The kind of numbers the industry is talking about is upward of $10-15 billion - that will definitely help in capacity improvement.Is the government doing enough The current government has done a stellar job in terms of improving the awareness levels, with a number of schemes it has launched to make sure insurance actually happens.Our model is like a microcosm of what is happening in the country today. We have been doing the same thing for the last 11 years, to bring in that financial and social inclusion.Customers are now becoming very tech savvy in their own way. The biggest change that will happen is based on the telecom revolution and connectivity through mobile phones. That alone has the power to transform the ecosystem for all financial aspects. The key is that the customer reigns supreme.