Insurance changes positive, give the companies time to adapt: Theodoros Kokkalas, ERGO International

MUMBAI: India has overhauled insurance regulations at a pace that would have taken Europe decades, but insurers need greater certainty on the timing of future changes, said Theodoros Kokkalas, chief operating officer of ERGO International.

"The changes in regulation that happened in India during this period (past couple of years) took decades to happen in Europe," Kokkalas said in an interview. "The direction is positive," he said, adding that regulators need to give insurers time to adapt to new rules.

India's insurance regulator is pushing changes to distribution and commission structures, alongside efforts to improve transparency and value for policyholders. "The market and regulator have to decide the right tempo and find the right balance," he said.


Kokkalas said greater predictability would help insurers make long-term business plans. "We make plans, and today making long-term plans is like science fiction in the dynamic environment that we live in," he said.

While India's general insurance industry is struggling to bring its combined ratio below 100%, with the industry average at 110-115% and ERGO is targeting a ratio of 80-85%, Kokkalas said there was no standard timeline for a market to reach that level.

"There is no standard timeline for a market to reach a combined ratio of 85%," he said. Profitability depends on market maturity, competition, volatility and regulatory oversight. ERGO is focusing on underwriting, pricing, claims handling and cost discipline to improve its performance, while using AI to improve efficiency.

ERGO expects growth of 6-10% through 2030, with a significant contribution from its US business, ERGO NEXT. Smaller businesses in the US remain underinsured despite the market's high overall insurance penetration, Kokkalas said. The group expects to grow faster than the market in most of its countries.

India is among ERGO's top five markets, he said, given size, growth prospects and low insurance penetration. But expanding coverage will take time and will depend partly on rising incomes.

ERGO holds a 49% stake in HDFC ERGO and is comfortable with the existing partnership, Kokkalas said, despite rules allowing foreign insurers to own up to 100% of an Indian insurer.

"We have a very constructive and fruitful cooperation with HDFC for 18 years," he said. "I would like to continue this cooperation as long as I live. We want to grow, but we want to grow in alignment with our partner. We are married." Any future decision on ownership or expansion into other businesses would need to be aligned with HDFC. An initial public offering of HDFC ERGO is not part of the company's plans, he added.

"It's not in our plans to go public. There are different reasons to go public, one of which is when you need capital. We are not in need of capital, he said.