Increased awareness, simpler wordings, standardised products…- K B Vijay Srinivas Retired Director and holding Joint Additional charge as CMD of United India Insurance Company Ltd.
Insurance is a sunrise industry in India. It has shown growth even during covid. The industry, in terms of premium, is the 10th largest in the world but when we look at penetration, we do not fare well. From 2.71 in 2001, we have come to 4.20 in 2022. There has been growth, but it has not been significant. This is evident from the insurance density, which is still far behind. Only about 50 crore Indians would be covered by insurance in some form.
Tremendous scope for growth…
India’s trend is quite opposite of global trend. The distribution of life to non-life in developed countries is about 40 per cent to about 50 per cent. In India, life insurance is about 76 per cent and non-life insurance is about 26 per cent. Like in other fields, we see the movement towards the international trend. This offers tremendous scope for growth. Even with such prospects, we do not see large number of players in the market. We have just about 57 insurers. When we compare with markets like Nepal or Sri Lanka, this is very less. The foremost inhibiting factor for investors is awareness. Awareness cannot be increased by the industry alone. It needs the help of other stakeholders too. When the Pradhan Mantri Suraksha Bhima Yojana, a simple accident policy was launched, the government pushed the bankers to sell it. Banks worked left, right and centre to enrol people and the result, more than 15 crore people have been insured through this single policy! Such a combination of conviction and policy planning is required.
Standardised products…
There is a lot of emphasis on developing new and fancy products. The Regulator should think of bringing few policies that are relevant to the masses. They should also mandate that a certain percentage of the premium of an insurance company has to come from these type of policies.
Simple wordings….
The next major hinderance is complexity of policy details. Even after serving at top positions in non-life sector, I am puzzled, when I try to take any life insurance policy. To address this, the regulator should come up with some standard products and any deviation from that product has to be highlighted and told to the customer by the insurers.
Increase the market size…
Yet another problem is with the increasing competition in a narrow segment. Everyone is fighting for their share in the existing market rather than increasing its size. There is immense potential and the reach of insurance can be increased by increasing the target group. Corruption is also a major issue. Huge amount of unhealthy business practices have halted the growth.
Growth enablers…
Certain factors that are enabling the growth of the industry are medical insurance, growth of nuclear families, vehicle scrapping policy, Russia-Ukraine war amongst other.
Future Focus…
The major areas to focus in the next 25 years would be to reduce cost of premiums so that products can become affordable. Technology can help simplifying the process as also to enhance business. The ultimate test would be claims settlement. A statistics shows that some non-life insurers repudiate claims in double digits. That is totally unacceptable and needs to be addressed to boost confidence. Fraud control is another major concern. Globally it is about 50 to 52 percent of claims and it could be higher in India. It’s not only frauds perpetrated by the insuring public; insurers also commit frauds.
