I
CC!lE.E
FROM THE EDITOR
Set to Attain Lofty Standards
- Brokers in Insurance
O
ne of the main reasons that
were put forward for opening
up of the market for private
participation more than a decade ago
was a conspicuous absence of the
spirit of competition. In hindsight, this
lack of competition can be attributed
not only to the players themselves but
also to the products that were being
marketed by them. With only a few
players – almost identical to each
other – and with similar products at
their disposal, the market was
genuinely devoid of any major
challenges of marketing. As if to add
credence to the lacklustre property
of the market, we had four players in
the Non-life arena with convenient
headquarters in the different zones
of the country, making it look like a
geographical and physical division of
the entire market.
The privatization of the industry
sought to eradicate any ‘run-of-the-
mill’ trends that were prevalent in the
market; and one of the early major
decisions in this direction was the
introduction of the brokers as an
intermediary. With the brokers
playing a crucial role in several
advanced markets, it was believed
that a similar situation in the Indian
insurance industry was just round the
corner. In addition to identifying a
client’s risks and planning a risk-
management strategy for them,
brokering a fair and economic deal
for the clients etc; a broker has to be
instrumental in bringing in innovation
.ta
in various aspects of operation –
particularly in product designing.
It has to be admitted that the post-
liberalization period has been witness
to several innovations in the market,
however minor. In order that the
Indian insurance industry attains
global standards in due course, there
is need for several more innovative
trends being introduced; and for this
to happen, the broker has a huge role
to play. With the number of brokers
steadily rising and the general industry
obsession for the top-line steadily
receding, it is hoped that we will get
to see a lot of positive innovation
happening in tandem with the
strengthening of the brokers as the key
insurance intermediary.
‘Role of Brokers in Insurance’ is once
again the focus of this issue of the
Journal. Prof. P.C. James takes the
first shot at the subject with his article
‘Catalysts for Economic Development’
in which he exhorts the importance
of educating the customer with the
aspects of risk exposure and on ways
to tackle them. He adds that it is only
the broker who can accomplish the
task in toto. In the next article, Mr. K.
Murali talks about the evolution of the
insurance broker and the various
interests that he serves. He raises a
doubt whether a broker can keep
himself clean from a ‘conflict of
interest’ that is a natural fall-out of
his role. It has been hotly debated
whether the banks should continue to
be corporate agents or whether they
should be made brokers. Mr. Tapas
Kumar Parida brings in his banking
experience to discuss the issue
threadbare.
The subtle nuances of legality of the
broker’s role have always been a
challenging topic for discussion,
especially in the domain of
reinsurance. Dr. Som Majumdar comes
out with an original case study to
throw light on the various aspects of
the subject. The contribution of the
broker as an intermediary in the
Indian insurance industry has not been
on par with that of several other
domains. As a true practitioner, Mr.
Kapil Mehta writes that this is a
genuine cause of worry; and suggests
ways for improvement. In one more
of banking related discussions on the
distribution channel, Mr. R.
Devaprakash suggests that there are
endless opportunities for the banks
to serve as a broker in the Indian
domain, with their vast reach and
access to millions. In the ‘thinking
cap’ section, Mr. N. Ashok Kumar
highlights the problems related to Life
insurance marketing and how an
improvement can be brought into this
hugely important arm of insurance.
It has always been felt by the
consumers in the Indian insurance
industry that a claim settlement is the
logical end to an insurance contract.
‘Claims Management’ will be the
focus of the next issue of the Journal.
U. Jawaharlal