Insured for success

If the National Insurance Academy (NIA), spread over a 32-acre campus about 15 kilometres from the Pune railway station, is often referred to as a modern-day "gurukul", it is not without reason. For, it is as much known for its insurance education and rejuvenating management development programmes as for its theme destinations, exclusive hospitality, distinct ambience and entertainment facilities. The NIA develops and conducts training programmes, seminars and workshops for executives working in the insurance and related areas in India and other developing countries. The scope has been expanded to include programmes in Information Technology, general management, human resource, investment and social security areas, apart from the academy's core competence in insurance-related areas. As its management team puts it, "the environment is regularly scanned with the help of insurance executives to identify the actual and perceived management development needs of practising managers".

The NIA promotes, develops and nurtures research and consultancy activities on institutional and individual basis. Areas of study include accounting, life insurance, general insurance, health care management, reinsurance, business economics, banking, investment, turnaround management, financial controls, risk management, regulatory provisions, human resource management, strategy and organisation. In an interview to Huned Contractor, Kailash Chandra Mishra, director of the NIA, outlines the role of the institution and provides insights into the direction that the insurance industry is heading towards. Mishra has a Master's degree in science, along with qualifications in the spheres of management and banking. He has headed many a financial institution in India and abroad.

What are the areas that the NIA focusses on with respect to training?

The NIA is the insurance training supermarket. We cover various matrices. One linear matrix is insurance that includes traditional general insurance, reinsurance, health insurance, agricultural insurance, credit insurance, deposit insurance and pension. The second matrix comprises the public sector, the private sector and the foreign sector. The third functional matrix comprises strategic management, underwriting, loss prevention, risk management, claims, marketing, organisational design, distribution channel, investment management, audit, surveillance, grievance redress, personnel, IT, systems security and human resource. The fourth matrix is MBA education, executive MBA education, broker's education, executive education, producer education, continuous professional development, actuarial education and BPO education in insurance along with regulatory education and compliance. The fifth matrix is research, action research, advisory services, training, entry education, consultancy and publications.

What is the NIA's strength in consultancy and research?

We have faculty with real time and online industry exposure; umbrella services in the areas of consulting, training, research and publications; exposure to industries in a wide variety of geographical locations and a complete range of business, working experience in collaboration with extremely creditable companies and firms; almost monopolistic access to industry experts and insurance specialists, working at the policy level, supporting and critiquing regulatory efforts; an unblemished track record of research projects and an unassuming and informal environment conducive to change management. Together, these elements strengthen our specialisation in consultancy and research.

What have been the trends in the insurance industry in recent times?

Insurance penetration and insurance density have been improving. There is now greater movement towards de-tariffing in general insurance. There is also a movement towards more investment products in life insurance. The national rupee is accepting more and more foreign exposures. Agricultural insurance is graduating to new products not guaranteed by budgetary support and credit insurance is diversifying from the erstwhile only-for-export credit monopoly of the ECGC [Export Credit Guarantee Corporation of India Ltd].

What is the size of the insurance industry in India?

Indian life premium, including renewal premium, is about Rs.120,000 crores adjusted for single premium only while the general insurance premium is about Rs.23,000 crores. The life funds have touched about Rs.425,000 crores that more or less represents assets of life insurance companies. The total insurance assets may touch Rs.500,000 crores soon.

How has the entry of private companies affected the insurance industry?

There is increased competition, more choices for consumers, more regulatory activism and increasing consumer awareness. Of course, there are some slippages in the practices but that may be a temporary phase. The country is moving up in the learning and forgetting curves and the resultant effect is positive at the moment.

What could be the projected future growth?

The insurance industry will grow at the rate of at least 200 per cent of the GDP [gross domestic product] for the next seven to 10 years. At even a conservative estimate of 12 per cent, the insurance premium is likely to reach Rs.260,000 crores by 2010 and life fund to exceed Rs.100,000 crores by then.

What kind of people are suitable for the insurance industry?

So far the insurance industry has been run by experience-intensive people. But now the trend is professionalism and knowledge working. Compliance issues and liabilities arising out of this will compel insurers to staff their organisations with bright and caring executives. At the producer end, insurers need informed sales people. With the all-pervasive intrusion of IT, insurers at all levels need to be enabled. Insurance people can be classified into seven As: agency (marketing), accountancy (record-keeping), actuarial (modelling), assurers (underwriting), adjustors (loss surveying), asset managers (investment management) and administrators (organising operations).

How does India compare with the rest of the world in this sector?

India is, so far, below average in the world when it comes to insurance business. It has a very poor penetration (almost one-third of world average and one-twelfth of the best). Its insurance density is one-tenth of the world average and one 200th of the best. The global share of India's insurance is less than 1 per cent, around 0.8 per cent. But India is now trying to catch up with China in insurance growth. The current growth rate of insurance is far better than the world average, a fact that brings India to the optimism map of the world.