Union Finance Minister, Shri Pranab Mukherjee has asked the insurance companies to create awareness among the poor and vulnerable section of the society especially the people living in rural areas so that they can avail the benefits of financial services. He further said that they may be informed about the benefits of the life insurance and insurance against natural calamities. Shri Mukherjee was addressing a large gathering of the representatives of the insurance companies in a function at Mumbai organized by Assocham on the occasion of Global Insurance Summit, today. Shri Mukherjee asked Life Insurance Corporation to increase its contribution to 2% of GDP from its present contribution of 1.84% of GDP. He asked the insurance companies to follow the system of benchmarking , introduce new insurance products, reduce the premium of policies and increase the visibility of the different insurance policies and products through print and electronic media, seminars and discussions etc.
On this occasion, Ms. Swati Piramal, President Assocham, J. Harinarayan, Chairman, IRDA, T.S. Vijayan, Chairman, LIC and V.N. Dhoot, Chairman, Videocon were also present this occasion among others.
Following is the text of the speech delivered on the occasion by the Finance Minister:
“It gives me great pleasure to address this august gathering on the occasion of the Global Insurance Summit 2010 organized by ASSOCHAM. I must congratulate the organizers for bringing together a large number of the insurance industry’s thought leaders under one roof. I see a number of key issues that have been discussed today.
With the opening of the insurance sector and entry of private sector companies, the competition has intensified. There is now a sense of benchmarking globally which is indeed a very healthy trend. This has resulted in development of new insurance products, reduction of premium, improved customer service, increased visibility through print & electronic media, discussions, symposia and seminars etc. ultimately benefiting the insuring public.
Let me focus on a few areas that I consider the biggest challenges in the Indian insurance market:
One of the important challenges before the insurance industry today is to generate the required level of awareness about the benefits of insurance to our people particularly living in semi-urban and rural areas. It should be our endeavour to take all necessary steps to ensure the reach of insurance to masses. As for meeting their rural and social obligation, the insurance companies are now increasingly tapping the semi-urban and rural areas to spread the message of protection of life and property through insurance cover. The Government of India has also introduced many special products aimed at the rural markets like Jan Shree Bima Yojana, Universal Health Insurance Scheme, Aam Admi Bima Yojana, Crop Insurance, etc. for the benefit of poor and needy populace in the country.
One of the main objectives of promoting financial inclusion packages is to economically empower those sections of society which are otherwise denied access to financial services, by providing banking and credit services thereby focusing on bridging the rural credit gap. Lack of protective elements may not serve the objective of promoting financial inclusion packages as the targeted section may fall back into the clutches of poverty in the event of unforeseen contingencies. Hence, to provide a hedge against these unforeseen risks, popularization of micro insurance is one of the essential ingredients of financial inclusion package.
The Government has implemented the Rashtriya Swasthya Bima Yojana for the benefit of poor people in the country. Many states have adopted this scheme. However, the health insurance still covers a very miniscule population of this country. The insurers have to ensure further penetration of the health insurance in this country. Simultaneously, there is a need to concentrate that the premiums are affordable for the insured.
We in the past have seen the devastating consequences on life and property on account of natural disasters. There is immense need of disaster management in controlling catastrophic risk in India. The insurance industry should prepare to deal with any kind of catastrophic losses. The insurance companies should concentrate on exploring the world reinsurance market, so that the impact of heavy losses can be mitigated. Indian insurers may learn from the global experiences in order to come out with a model that will work for the country.
The skills of underwriting business which got lost with the introduction of tariffs in general insurance business have to be brought back into the non-life industry. Insurance is a knowledge based profession, and underwriting skills its key area. To be in the forefront, the companies constantly need to train their employees and keep themselves abreast with the new developments in the insurance field.
To achieve this, the insurance companies need to have continuous professional development programmes, in-house specialized training programmes, advanced level training sessions, etc which can result in improved productivity of an employee. The investment by companies on skill up gradation of its employees is an ongoing process. The coming 10 years are expected to increase the insurance penetration in the country and companies that pay attention to this aspect will benefit greatly.
Adoption of Technology:
One of the crucial areas in the insurance sector is the adoption of new technology in the industry. It is an accepted fact that insurance business is technology driven. It has the potential to save cost and hence, the scope for reducing price of product. Coming years will witness a total revolution in the ways of doing business. I request you all to make maximum use of technology to extend your outreach and reduce costs.
Grievance redressal Mechanism
Any business has to ensure customer satisfaction to survive in the long term. Protection of policyholders’ interest is possible through a fair dispute resolution and adjudication mechanism which is easily accessible. While ombudsmen provide a dispute resolution mechanism, it is essential that insurers themselves institute efficient in-house grievance redressal mechanism where the policyholder is the centre of attention. IRDA has also taken an initiative in setting up a grievance redressal mechanism with a toll free No. I hope all the insurers will work to make the grievance redressal system a success.
New Regulations on ULIPs
In the recent past, IRDA has come up with a number of regulations and guidelines especially in the area of ULIPs. This initiative is in the interest of the policyholder and would help in building confidence of the prospective policyholders in the insurance products. I am happy to note that the insurers have adapted to the new regulations. I commend the regulator and the industry for taking this very positive initiative and am sure that this process of reforms shall continue.
With rising incomes in the country, the need for insurance is bound to rise and this provides opportunity for the insurance industry to tap this growing need and provide insurance cover both life and non-life to the large masses of this country. I am sure, the industry will rise to the occasion.
With these words, I wish this Summit a grand success.”