from the editor
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No Way Insurmountable!
A
part from several other
improvements that were
anticipated in the aftermath of
privatization of the insurance industry,
one that was eagerly looked forward to is
rapid innovation in product designing. It
was felt that on account of several global
players making a foray into the Indian
insurance domain through joint ventures,
the onset of innovative products in
insurance was just a matter of time. More
than a decade down the line, whether we
have had the privilege of such products
entering the market is one’s guess,
although a few players have ventured to
come out with some imaginative changes
in their product portfolio – at least in the
form of riders and add-ons.
Another area that was expected to
register a huge surge is the policyholder
servicing – both pre- and post-sales. While
several initiatives were introduced into
the industry, particularly in the area of
Information Technology, the comfort that
was envisaged to be felt is still not
forthcoming. The huge number of
consumer grievances, especially in
personal lines, is a bothersome factor and
needs to be set right at the earliest. In
addition to consuming lots of precious
time and effort of the management, it
brings ill-repute to the industry which it
can ill-afford at this stage.
In the domain of Life insurance, the
continuing trend of larger than tolerable
levels of lapsation is another area that is
posing a big challenge to the players as
- Challenges in Insurance
also the policymakers. There is need for
exercising additional diligence in the area
of marketing so that the erosion of
business, owing to poor assessment of the
prospect’s needs, is put in check. Further,
looking at it from the policyholders’ angle,
it is strange that the free look period that
was introduced as a counter-measure for
a possible mis-selling is hardly made use
of; and the tendency to discontinue the
policy after a few months or years
continues unabated. There is a serious
lesson here for the players to ensure that
the distributors exercise sufficient care in
explaining the contractual obligations at
the time of selling so that persistency
levels register a noticeable progress.
These are just a few of the several
challenges that the industry is faced with
presently. The focus of this issue of the
Journal is once again on ‘Trends and
Challenges’. In the first article in this issue,
Prof P.S. Nagpal and Ms. Richa N. Gautam
discuss the various combinations that can
imaginatively be worked out so that
personal lines of insurance, which should
drive the market in a big way,
demonstrate a healthy growth in the
market. Prior to detariffing, the priorities
of the players harped on an ‘account
underwriting’. Can we afford to continue
with this practice? We will get to see what
Mr. K. Murali, the author of the next article
has to say in this regard.
In the Life insurance arena, the number of
distributors keeps changing quite rapidly;
and one reason attributed to this
phenomenon is the lack of professional
approach by several of these newcomers.
In the next article, Mr. Nirjhar Majumdar
takes up the case of wholesome
commitment by the agents, being the
main reason for higher business
retention. ‘Life insurance has failed to be
an essential part of one’s personal
financial planning and has been bought
for reasons other than as a genuine risk
cover’ in the words of Dr. G. Gopalakrishna.
He goes on to elaborate what exactly
would be the requirement of Life
insurance in one’s portfolio. Irrespective of
whatever progress the country and the
society demonstrate, the health needs of
the economically downtrodden remain
unfulfilled; and there is an urgent need for
finding a universal remedy for such an
incidence. Ms. M. Malti Jaswal takes up the
case of universal health coverage in detail,
in the next article.
It is not difficult to understand that there
is no dearth of challenges in an emerging
market. Are we fully geared up to face
these challenges or is there anything
better that can be done to overcome
several constraints? In a record of sorts, we
will focus on the ‘Trends and Challenges’ of
the Indian insurance industry for a third
time in the next issue.
U. Jawaharlal