Oman vistas

THE NEW INDIA ASSURANCE Gonu gives a chance to show prowess




Dr J Retnakumar Resident Manager

Cyclone Gonu may have been the biggest thing to hit the insurance industry in Oman, but it is not going to cast any ripples (in the insurance industry in Oman) in any big way, says Dr. J. Retnakumar, Resident Manager – Oman operations of The New India Assurance Co. Ltd., in this interview with Oman Vistas. He notes that the insurance industry here, like Oman, has the capacity to take the brunt of an attack, be it a natural calamity, or otherwise, pick up the pieces and move on, stronger from the experience. “Of course, there will be issues to be tackled, but, it will not change the insurance industry in anyway,” Dr Retnakumar says. Commending Oman’s “amazing” resilience in the face of great adversity, Dr Retnakumar likened Oman to be as solid as the ‘Rock of Gibraltar’ and said the country was well on its way into the process of rebuilding. Dr Retnakumar noted that the Capital Market Authority (CMA) was doing a “great job” in regulating the industry and bringing order into the market. “In many countries, such regulatory bodies do not even exist. The beauty of Oman is that it not only has a regulatory body, it was also doing an excellent job.” New India Assurance, Oman, has also done well so far this year. It has achieved excellent performance for the period ended March 31st, 2007, registering its highest ever net premium increase of 33 percent. “We owe this achievement to our valued corporate and individual clients who have extended their support and patronage. We rededicate ourselves to provide matchless service to customers now and in the future as well,” he says. Excerpts: Has the insurance industry been badly hit by Cyclone Gonu? All insurance companies are having losses because of Gonu. But all of them are fighting to come up, and the truth is, all are coming up well. They have all promptly got on track and have done their bit to rein the insurance sector in, post Gonu. We know now that calamity is a reality. But, we have all risen to the occasion. As far as New India Assurance is concerned, we deputed surveyors on the day after Gonu hit Oman. Luckily, our telephones and faxes were working and from June 7th onwards we were sitting here, working right through national holidays, registering the claims and we have dealt with the issue in a systematic way. As soon as we were intimated about the problem, we began to entertain claims, visited premises that suffered damage and began working on it. I also visited some premises with a surveyor. Give us an idea about the claims that you have received so far? We have received around 275 non-motor claims and around 400 motor claims as of today (Thursday, June 28). Have you ever faced something like this before? Our company has been here for nearly 34 years (since 1974). I have been here in Oman since December 2005, December, and am in this industry for the last 20 years. But no, I have not experienced anything like this before. This experience is quite unique. Especially managing the customers – talking to them and satisfying them – is quite a challenge. Most customers wanted surveyors to be in their houses or premises, soon after Gonu hit. And we have complied wherever and whenever possible. I even sent my marketing team to many Gonu-hit places to take photos and the like. We have done everything possible to satisfy our customers and say that we are with them and we have formed a crisis team. Now the focus is on managing the claims, but of course, we are accepting all new proposals that come along. So, there are also new proposals? Yes of course. That is part and parcel of our trade. It is coming but, the main and prime focus is on settlement of claims. Do you have a timeframe for the settlement of claims? We have formulated a strategy for a time-bound settlement. But surveying is the main problem, especially vehicle surveying. Settling major claims will take time. The real assessment has to be completed and then subsequently all records will take time, but I am confident that we will be able to settle the motor claims in a matter of weeks. The reason that motor surveying is a problem is because we don’t have that many surveyors. We have to go to each and every part of Oman to access and survey the damage, so, once we find that the vehicles are reparable we send them off to the garages. If the vehicles are beyond repair, we give it for salvage purposes and immediately settle the case. We have hired a yard – with a security in place -- and are moving all the vehicles, which have been written off there. Again, transfer of the vehicle takes time. Are you worried about the task ahead? No! Not at all! We are a global player and we have operations in 27 countries. We are well protected with good securities and excellent solvency. We have been in this business since 1919 (1920, we began the London operations), and as far as our operations here are concerned, we have no worries at all! We are only keen that we settle the claims, quickly. How long do you think it will take for the total settlement? Motor claims will be settled in another two to three weeks. But the other things will depend on the contractors and projects. Certain properties have suffered – certain factories and big machineries – so experts have to come and inspect the machinery and this will take time. I think all those claims, especially the complicated ones, will take another three months. But as far as the small claims and motor claims are concerned, we hope to settle them in two to three weeks. Has Gonu been a learning experience for you? I see everything as a learning experience. We have to understand that we need to be very careful in acceptance of the risk, wherever it may be. Who would expect a cyclone in the Middle East? It is unthinkable, but it happened. And who would think of a flood of this level in this area? Again, it happened. So, concepts are changing and new events are shaping up. So what we need to do is to have a rethinking of the entire portfolios, because every company will have a reinsuring arrangement. Reinsurers will have to bear the loss. Definitely, their ratings will also change – at least for sometime. We had the Gonu hitting us and before that, there were two or three floods. So, quite naturally, the reinsurers will also demand better rates and ultimately they will hike the rate, which the customer has to pay. The customer and the public at large should also take proper precautions. Would Gonu change the insurance industry in anyway? I don’t think so. Especially when the companies concerned have proper agreements in place. And there is reinsurance, which is actually sharing of losses globally. So if Oman or Dubai suffers, this will all be shared globally. So I don’t think that there will be drastic changes in the industry. There has to be a change in the underwriting philosophy though. We will have to have a risk premium for the particular risk. Instead of unhealthy competition and instead of blindly quoting less for a risk that deserves a better rate, we must have a risk premium in place. That philosophy has to change. Also, after evaluating the risk, you have to charge reasonably for motor insurance, otherwise, in future, you are forcing the public to pay more premium. And we also need to categorise each area in Oman as low lying, flood prone etc. Many ground floor and basement areas of buildings in Qurum area were fully flooded. That is a real eye opener. I think constructing buildings in these areas should be discouraged and people will have to think of alternatives. I say this because insurance is paying just a percentage of the loss, so people still lose. And wadis should flow. We should never come in the way of wadis, because when we do, it becomes a risk factor. What do you think of the post-Gonu scene and the rebuilding efforts? Fantastic! We have to compliment the government, because the government and the entire machinery acted very promptly. In fact, in so many areas, there was no problem at all. At least, not in our office in Ruwi. Everything was working in our office. I really appreciate and applaud the commendable efforts by the government and the people of Oman. This has brought everyone – especially the Omanis and the expatriates – together. In many areas, Omanis and expatriates were moving hand in hand to help each other and others. People still have confusion over the terms ‘comprehensive’ and STF? See, it should be an inbuilt cover and customers should be given an option to opt out of the cover: for example, if the insurance companies charge 4 percent or 5 percent and if the customer says that he/she does not want earthquake cover, there should be a provision to give them a discount. I hope this comes into place here soon. What about the market in general? What phase is Oman’s insurance sector going through? We are still in a transitional phase. We are on the route to a phase of stabilization and we are building enough base for that. And the regulatory body, the CMA, is still making good efforts to regulate the industry and bring in stability. They are coming out with a lot of suggestions and they are doing a good job in guiding the market. This is great for Oman, because if you look around, you will see that in many countries such regulatory bodies do not even exist. But here, they not only exist, they are also doing a good job! What about new players coming into the market? New players will always be interested in coming since Oman is a progressive country and there are a lot of developmental projects. And isn’t Oman’s resilience amazing? Even though Gonu hit the sultanate, within days the country was back on its feet. Nothing, not even natural calamities, can retard the developmental progress of this country. So, new players will definitely come. But these new players have to apply to CMA, and if they are able to satisfy the set norms, they will be through. Many players would seek an entry into Oman as it is a developing country, rich with new projects, like the developmental projects for Salalah, Seeb international airport and many others. So many Indian players are there in construction and manufacturing. They are also interested to come to Oman and tie up with local players. Yes, many will come, but then the regulatory body will ensure proper regulation so that the market does not go down. But in a market of just RO150million, wouldn’t everyone be sharing the same cake? Yes, but since there are lot of new projects coming up, it will add more value to the customer. People will effectively think to provide the best cover and ultimately, the quality of the product may increase and failure in the projects will be to the tune of very minor percentages only. So, the entire project will have value addition, which is a positive thing. But without that, without adding value to the insurance schemes it will not be right. If the regulatory body looks into it and if they are giving permission to new companies and players, they should actually give a serious thought to these issues. And what is New India Assurance’s share of the cake? We are doing well. We have been in Oman since 1974 and for the last three years, we have been doing extremely well, especially in non motor areas, project insurance, engineering insurance and non-traditional business also. Our recent schemes have been of great help to those from the lower salary segment. For the first time, we have also introduced a health insurance – for both Omanis and expatriates – in Oman, wherein they can have treatment in Oman and in India, Pakistan, Bangladesh and Sri Lanka. The cover also provides emergency treatment, anywhere except in the US and Canada. We have corporate clients under this better health scheme and we are not giving individuals now because this being the first year of its introduction (the scheme was introduced in January 2007). In the six months, we have now around 4000 people – under the corporate segment – already. We had planned many more interesting schemes under the same umbrella, but then Gonu came and we were not able to launch them. But, we are not worried about the delay and we will soon be launching them. Innovation is our key to success and we will definitely be rededicating ourselves to the best interest of the people of this country. Whatever good work we have been doing will continue. And Gonu will not make any change in the service parameters! Gonu has in fact pushed us to excel even further! So, it has given you an opportunity to prove yourself again? Yes, and indirectly it has made us what we are. We are never complacent and have real satisfaction in the way we dealt with things. We have managed this entire situation in the best manner possible and all my team members – both Omanis and expatriates – are doing a wonderful job. They are here throughout. Our only target is to see that these claims are met with.