Micro-covers turning 'push' insurance into 'pull' products, says Universal Sompo CEO

Edited excerpts:

Health is a major business for you, correct? How do you see your product mix evolve in the upcoming quarters, now with the GST cut coming into effect?

Yes, health is one of our two core verticals, alongside motor insurance. Health insurance contributes about 20–22 percent of our gross premiums, while motor contributes around 35 percent. Another 10-15 percent comes from crop insurance, and the balance is distributed across fire, marine, engineering, and other commercial lines. Health has been growing strongly, particularly post-COVID, because awareness about medical expenses has risen sharply. Crop will likely decline to around 7 percent. Motor and health combined will make up about 65 percent of the portfolio. We do expect health to take over our motor business at some point, now, with the GST cut. Commercial lines such as property, fire, marine, engineering, and liability, will also increase their share as the economy expands. Personal accident will be about 5 percent, with miscellaneous products filling the remainder.

Universal Sompo has invested quite a bit in non-traditional distribution channels. What scope do you see there?

Yes, we are investing in non-traditional distribution channels like e-commerce. This is where we see future growth. We are designing innovative, bite-sized products such as cancellation cover for motor, ride-injury insurance bundled with cab aggregators, contractual obligation insurance like extended warranties on consumer durables, and pet insurance, which is slowly gaining popularity in urban centres. These are all low-ticket, tech-enabled products. They may not bring large premiums individually, but they can scale across millions of customers.

Currently, how much of your sales come through e-commerce?

At present, in premium terms, e-commerce contributes about 2–3 percent of our overall business. But if you look at the number of policies, the impact is far greater. For example, through cab-booking partnerships in 27 cities, we sell thousands of trip-injury policies every hour. These are low-ticket products, sometimes just a few rupees in premium, but their reach is massive. The real value lies in customer inclusion. E-commerce channels help us reach first-time buyers with simple, relevant products, building familiarity and trust. Over time, many of these customers are likely to move on to larger, more comprehensive covers.

Would you be interested in composite licensing, selling both life and general insurance?

At present, our group isn’t actively exploring composite licensing, but we do see its merits, particularly for global insurers that already operate multi-line businesses abroad.

Products like the Re 1 trip cover offered by Ola and Uber during COVID were very popular. Do you think such micro-products can change the way people perceive and buy insurance?

Exactly. I think micro-products are changing insurance into a pull product from a push product, that it has been for the longest time. Traditionally, insurance has been a push product, sold through agents or mandated like motor insurance. Micro-products change that dynamic. When a cover is simple, affordable, and directly relevant, like a Rs 3–5 trip insurance, it becomes a pull product. Customers see the value instantly and buy it voluntarily. This makes insurance relatable, builds habits of protection, and gradually leads people to more comprehensive covers. With India’s non-life penetration at just one percent of GDP versus 9 percent in the US, such bite-sized products are a crucial bridge to close the gap.

Around 50 percent of vehicles in India are still uninsured. If tackled, wouldn’t this be a huge growth driver for general insurers? How can the industry tackle this?

Tackling uninsured vehicles is one of the biggest growth opportunities for the industry. Encouragingly, we’ve already made progress: a few years ago, nearly 70 percent of two-wheelers were uninsured, and that number has now come down to around 55 percent, even as auto sales have continued to grow at 15–17 percent CAGR. Of course, some portion will always remain uninsured, in mature markets like the US, 12–15 percent of two-wheelers are still outside the insurance net. But even a 5–10 percent improvement in India would translate into millions of new policies and significantly boost penetration. The way forward is through a combination of stricter enforcement, greater use of digital platforms for seamless renewal, and innovative, affordable products designed for two-wheeler owners, many of whom are highly price-sensitive. Partnerships with OEMs, dealers, and even fuel stations or service centers can also help close gaps at the point of sale and renewal.

For a long time, insurance companies have been lobbying for rate cut of GST rather than an exemption, right? Did the exemption come as a surprise to you?

Yes, you are right. The industry had been discussing a mere rate reduction rather than exemption, as exemption means the insurers cannot claim ITC on their expenses. However, the exemption is secondary consideration if you look at the bigger picture, which is affordability for policyholders. Yes, ITC is a technical, transactional issue for insurers, but the strategic benefit is far bigger.

There has been discussion about setting up a separate health regulator to oversee costs and pricing. Given the current disputes between hospitals and insurers, how do you view this proposal?

The idea of a dedicated regulator for hospitals is currently widely being discussed. It reflects a genuine need for greater transparency in healthcare pricing. That said, regulation should not only focus on controlling prices but also on creating systems that encourage efficiency, quality of care, and fairness. For example, initiatives like the National Health Claims Exchange (NHCX) can play a key role. If all hospitals join NHCX, as insurers already have, then claims data and treatment costs become standardised. It creates transparency without directly interfering in how hospitals set their charges. Patients would know costs upfront, insurers would process claims faster, and disputes would decline.

Could monoline or sector-specific licenses become a reality?

Yes, monoline or sector-specific licenses are another idea currently being discussed, and could soon become a reality. Such licenses would allow insurers to focus on a single segment, say crop, health, or regional general insurance, while operating with lower capital requirements. This approach could be particularly effective in enabling regional players to serve rural markets, the Northeast, or under-penetrated states like Bihar and UP. India currently has only about 25 general insurers, compared to over 1,000 in the US. Given our much larger population and diverse risk landscape, there is clearly room for more specialised participation. Monoline and regional licenses could encourage new entrants, promote niche innovation, and bring sharper focus to underserved customer segments.

What about the Risk-Based Capital (RBC) framework? It was supposed to roll out in August. Where does it stand now?

Work on the Risk-Based Capital (RBC) framework is progressing well, and the industry is fully engaged. Actuarial teams across insurers are running impact studies and sharing detailed data with the regulator. The regulator is currently taking a phased approach, starting with data collection and calibration. With industry feedback shaping the framework, we expect a smooth transition and anticipate formal rollout within about a year.