HDFC International obtained its DIFC licence in January 2016 and has been in operation for more than two years. The company, with an authorised capital of US$25 million, had a modest beginning in 2016-17, the first year of operations, with a total premium of about $200,000. This year, it is hoping to report a substantially higher figure.
As the first and only life reinsurance company registered in the DIFC and fully regulated by the DFSA, it wants to create ecosystems which insurers can be a part of, which will actually help them develop their own businesses.
“We have the first-mover advantage. We are very selective in our choice of partners to whom we offer reinsurance. We are not a pure play reinsurance capacity provider, we want to leverage our inherent strength of understanding the life business because our entire pedigree is life insurance,” said Mr Yogishwar.
The HDFC group is India’s largest private financial conglomerate and is recognised as being the most respected financial institution in the country with a network consisting of banking, insurance, asset management and realty.
HDFC International is working with Orient Insurance in the UAE and Solidarity Bahrain, and also offers capacity in Oman. The reinsurer is working towards starting operations in other markets in the GCC. In due course, the reinsurer wants to get rated as a rating is a prerequisite to enter many markets.
The reinsurer wants to transform the entire business model through its understanding of insurance and reinsurance. “If the insurer and reinsurer come together, the kind of products that can be designed are completely different, and the kind of processes and value offering will be completely distinctive,” said Mr Yogishwar.
Portability problem
It is a fact that this is largely a non-life market and the penetration on the life side is very low. Because of penetration on life is low, most companies in the region cannot play on volumes, and therefore tend to maximise whatever they can get out of it in terms of higher commission. “It’s a very heavy ‘push’ product and not a ‘pull’ product,” he said.
The products, particularly life, available in the market are very restricted. The types of products that are being sold are heavily distributor-centric and usually offer very high commissions. “I still feel the customer should become the focal point of the entire distribution scenario,” he said.
Genuine portability is one of the reasons for low penetration in life market in the Gulf. “As a reinsurer, we would like to work with insurance companies and see if we can come up with a product that is truly portable. Once the entire regulatory framework is worked out, we can come up with a genuinely good product which is reinsured by us and when the expat moves back to India, the reinsurance continues under the umbrella of the HDFC parent, subject to all regulatory approvals on both sides.”
Mr Yogishwar said the regulators are becoming more aggressive, which is a welcome sign. “What will now happen is that with greater regulatory interaction, the end product that will be made available to the customer will probably become superior and the moment the product becomes superior, the element of the consumer actually going out and buying the products becomes much more predictable.”
Innovation pioneers
“Our confidence is that HDFC International will become the innovation torchbearer in the years to come. We don’t want to work with insurers, rather we will work along with them and move away from simply offering the entire ‘value added service’ proposition to them. The plan is to go deep into their processes and see how the company can impact the overall value chain and life cycle as a very innovative reinsurer,” Mr Yogishwar said.
With this in mind, HDFC International is exploring how technology can be used to bring efficiencies in the entire process of insurance in sales and administration. And the torchbearer will take a new path other reinsurers have not trodden so far. M