The insurance sector in India was thrown open to private companies in 2000, attracting a rush from banks, private companies including global companies to join the fray. Today, even after two decades the spread of insurance is very poor.
There is huge potential for the general insurance sector that extends insurance cover to property, motor, health, agriculture, etc; but only a small portion of this is tapped. There are several issues plaguing the industry.
The Insurance Regulation and Development Authority (IRDA) was set up in 2000 for the regulation and development of the insurance business. But not much has been done by IRDA on the development front.
For most GI companies the motor portfolio has been a key driver for growth in revenues, but not much for profit growth. This is also because of non-compliance on the part of a large number of vehicle owners to take even the mandatory third-party insurance. With proper coordination among the IRDA, insurance companies and the state RTAs, fuller compliance could be achieved.
Delay in settlement of claim is another issue that ails the insurance industry. Timely relief to the victims is denied due to long-drawn litigation and the nexus among the police, lawyer, insurance company and the auto repairer. Out-of-court settlements could provide quick relief to the victim – his family.
In recent years health insurance has been receiving much greater attention. The Covid-19 pandemic has expanded this interest., Group insurance schemes have gained prominence but the premiums have been continuously on the rise. Corporate hospitals, with their focus on increasing profits, contribute to ever increasing costs of treatment. The Tamil Nadu Chief Minister’s Health Insurance Scheme providing free medical treatement in hospitals across the state for large sections of the population is a welcome move to help the needy.
Insurance of property against fire, floods and other calamities will help in a big way but has not been taken up widely.
Across the globe, insurance has been a thriving business. In India, post – nationalisation in 1972, general insurance was consolidated into four major regional companies, with the General Insurance Corporation as the holding company. Even though their profitability was good, penetration was low. Private companies that rushed into the insurance business face stiff competition and, for most of them, hopes of major expansion have not been realised. Shriram General Insurance Co with sharp focus on motor insurance, has performed well. A special report on SGI is part of the issue.
Interested reader may access the complete article in the Industrial Economist December 2020 issue. http://industrialeconomist.com/digital/Dec2020/mobile/index.html