Listing of insurance companies in the country will soon be a reality, said the panelists at the Business Standard Insurance Round Table here on Thursday. Finance Minister Arun Jaitley said in the Union Budget 2016-17 that public sector general insurance companies would be listed, and hopes have been raised for the first listing of an insurance company in the industry.
G Srinivasan, chairman and managing director, New India Assurance said that the listing process was possible in a short span of time. "While we have to go through the process, all four public sector insurers are in a position to list, though it could take six to nine months. New India Assurance will be one of the first companies to be listed."
Apart from Srinivasan, the other panelists in the Round Table included HDFC Life MD & CEO Amitabh Chaudhry, SBI Life MD & CEO Arijit Basu, Religare Health Insurance MD & CEO Anuj Gulati, Marsh India Insurance Brokers CEO Sanjay Kedia, and Life Insurance Corporation of India Executive Director Vipin Anand.
Getting insurers to list on the stock exchanges has been an area of focus for the insurance regulator. The regulator has even said that they may nudge insurers to list if they feel a need to do so. Among private insurers, only HDFC Life has announced its plan to list on the markets, though it has not specified any timeline.
Chaudhry said the impact of listing will be huge on existing and prospective customers if it is done at the right price and if the post-listing performance is decent. "The confidence will improve and the trust deficit will come down. As we become owned by customers, we have to sign up for standards which are higher than what we are at today," he said.
According to him, the Insurance Regulatory and Development Authority of India (Irdai) has been pushing for listing because it wants them to stand on their own feet and not depend on promoters. "We are looking forward to it as and when it happens," Chaudhry added.
A lot of expectations have been generated on if and when Life Insurance Corporation of India (LIC) would list. While LIC's Vipin Anand said that this was a government decision and there is not development on this front as of now, he added that the scrutiny that LIC faces as a public sector insurer is much higher than some of the listed entities.
While New India's Srinivasan said listing would help improve the profile and image of the industry, Anand explained that even after 15 years of private sector insurers, LIC continues to be the dominant player in the market and its image among customers remains the best.
"Listed or not listed, a competent performing public sector insurer can hold its own," Anand added.
Adding to this, Religare Health's Anuj Gulati said, "The level of financial reporting we do, the amount of data we put up on our website is no less than what listed entities do."
Distribution of insurance products was an important point of discussion, where there were opposing views on open architecture between insurers having bank partners and those that didn't.
SBI Life's Arijit Basu explained that mis-selling is very low in the bancassurance channel, and is about one-fifth of that in the agency channel.
He said enforcing open architecture at banks would not be beneficial. "We have 80 per cent of our sales through the bancassurance channel, and we are still covering only 30 per cent of State Bank of India's branches. That is the problem. Insurance itself is a nascent activity for banks. If you were to impose something, it would be detrimental," he said. However, he added that bancassurance would eventually go the open architecture way in the next few years, a thought shared by other panelists as well.
In the past, banks have not agreed to become insurance brokers, preferring the corporate agency route. Marsh India's Sanjay Kedia said that any insurer owned by a bank, would not prefer open architecture.
"Open architecture will work for banks that have no insurance subsidiary or partner, but the bank will be driven by which insurance company offers the higher commission and incentives for volumes and will promote those products," he said.