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| Hic cups with general insurance psu's | | | Dr. Daleep Pandita | 2/6/2015 11:20:36 PM |
| Entry of private players in to the sanctum sanctorum of Indian general insurance
industry neither created much needed insurance awareness nor percolated down the real
benefits of insurance among the masses truly among the rural poor. Enjoying the patronage of their experienced foreign partners, these insurers mostly concentrated on commercially viable segments and grabbed insurance business mainly from urban areas at the cost of rural India. Private players failed in fulfilling the social obligations and even could not maintain rural targets stipulated by Insurance Regulatory Development Authority ( IRDA ). The situation thus created did not protected the basic interests of policy holders as indicated by the increase in number of litigations arising out of insurance transactions in the country. Also the idea of generating healthy competition among the government and private insurers for rendering better insurance services ultimately got aborted on way. Not withstanding justifications, all such facts are quite evident at the ground level. Thus opening of Indian general insurance industry did not achieved the basic mission for which it was introduced instead created another phase of capitalism in the country. It forced the policy makers to thrust certain changes in the insurance business done by government owned general insurance companies by improving the marketing channels through the introduction of insurance brokers, creation of Bancassurance partners and development of motor tie-ups as a remedial measure, which is also prevalent in other parts of the world. Introduction of insurance brokers for improvement in marketing and quality service delivery did not really picked up in Indian conditions neither in terms of their penetration deep down the market nor in giving needed guidance and support service. Insurance brokers mostly concentrated on mega business segments for making their profits and remain beyond the reach of a common man defeating their very purpose of their introduction. In the meantime government weeded out the centaury old fundamental marketing backbone of Development Officers by replacing it through the re strengthening of existing agent system. Unlike agency system of Indian life insurance industry, which enjoy three way support, firstly from the Government in terms of granting Income tax exemption benefits, secondly from the insurance company in terms of giving fixed remunerations and other benefits and thirdly from the insuring public seeing investment as a mean of generating savings. Comparatively, the agency system in general insurance industry do not enjoy all such advantages, so it is neither remained long lasting and nor dependable. Such conditions for general insurers ultimately resulted in mis-selling for which at the end of the day a common man suffered both financially and morally. The real price for the product and the services offered differed substantially which created confusion and finally encouraged unethical marketing practices by offering discounts and advantages.The huge size of Indian general insurance industry, both in terms of vastness of its market and large manpower strength virtually makes it difficult for the Regulator to control it, particularly under the influence of Government.Destabilizing level playing field between Government PSU's and private players by acts like unilateral prevention of offering discounts in premium, forcing only PSU's to represent in commercially non viable rural areas without taking private insurers to such levels, conversion of fully operating office to representative or micro offices, qualitative and quantitative reduction in recruitment even under the massive retirement era, settlement of losses of unlimited liabilities in motor third party claims etc. not only make general insurance PSU's deliberately sick but also a national wastage for not utilizing their enormous experienced man power talent. Weaponry and control over the expedious disposal of insurance claims were forcibly handed over to third party administrators ( TPA ) particularly in the field of health insurance having huge market potential in Indian scenario.
Still the general insurance PSU's are growing higher than the industrial growth in India, catering to the insurance needs of both urban and rural India, providing huge direct and indirect employment opportunities, generating substantial income in terms of taxes and profits, expanding insurance awareness and above all ensuring the financial stability by covering the risks and uncertainties which are very common in our present day to day life.
Strengthening of the Indian government general insurance companies by providing level playing field in tandem with private insurers, ensuring free and fair trade practices with open pricing of products and service charges, representation deep down to vast rural segments and unrepresented areas, introduction of insurance education at least at college level, coming up with proper recruitment and promotion policy and stoppage of closure of offices can be some of the corrective initiatives to be taken immediately in order to restore faith and confidence in their survival must remain priority for the government.
( Writer is Divisional Manager with government of India general insurance company ) |
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