Only top 5% riding growth wave

Pune: Hadi Riachi, CEO, Swiss Re India, in his special address at National Insurance Academy (NIA), focused on the 3 Ds: Divergence & Digitalization & Decarbonization. He said that only the top five per cent of the population have seen their wealth grow and this diversity is making the economy's revival fragile.

We require policies to address these divergences to aid sustainable growth. India's Mortality Protection Gap is 83 per cent and 72 per cent of the Households underestimate the need for protection, he said.

He addressed an international seminar here on Sunday. NIA and Swiss Re jointly organized the seminar on the theme of 'Mitigating Emerging Risks through Innovative Risk Solutions' on the virtual platform.

Pandemic has resulted in paradigm shifts at the consumer and macro-economic level, which is driven by young demographics, the surge in investment in digital infrastructure along Government support. Digitalization will allow insurers to rethink their approach in pricing, distribution, and managing the value chain. Talking about Climate change, he said it remains the top risk for all of us. The year 2021 was the fourth costliest year since 1970, with more climate events are happening. The temperature may increase by 3.2 Degrees by the mid of century, which could result into reduction in India's GDP by 35 per cent. As Climate change is a systemic risk, Insurers and Reinsurers can be a part of a solution for this problem.

TL Alamelu, Member (Non-Life), IRDAI, in her keynote address said that the emerging risks can have a major impact on the economy, as these risks are highly unanticipated, both occurrence and the potential consequences are uncertain. As an insurer, depending upon the information gathered, our response to these events also changes. Insurers should take these emerging risks as an opportunity with proactive and vigilant stands to build a sustainable and resilient insurance market.

She said that the IRDAI has come out with standardized insurance products and the customers were also involved in the process to frame the Model policy wordings for these standardized products. To some extent, Natural Calamities can be addressed by the recently launched Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha standardized policies. Economic losses due to climate risks can be minimized with the knowledge transfers from the reinsurers.

She said that the Government is considering to keep Insurers at par with the Banks in terms of IBC code while formulating Surety Bonds guidelines. She said that with increasing IT literacy, the insurers should see it an opportunity to develop capabilities and develop innovative products and better accessibility.