vantage point

Overcoming the Hurdles

- Indian Insurance Industry

‘Several challenges that confront the insurers in India presently are within the control and reach of
the players, if handled properly. One looks forward to the day when the insurance industry exhibits a
more vibrant and systematic growth’ writes U. Jawaharlal.

Several of the insurance cases that have
been referred to either consumer courts
or any of the alternative dispute
settlement forums have led to the verdicts
being in favour of the policyholders. While
it may not be indicative totally of a
righteous settlement of the policyholders’
rights, at least a few of them have gone in
their favour owing to the policy wording
being insufficient, ambiguous or
ambivalent – if not all of them. In a
domain where the knowledge levels of
most of the clientele are below par, it
would be doubly necessary to ensure that
the doctrine of contra proferentum does
not come into operation. To obviate such a
situation, as has been said time and again,
there is need for absolute simplicity and
openness in wording the contractual
obligations.
Despite several measures having been
taken, the business retention levels in the
area of Life insurance continue to be lower
than desirable. While the analysts assign
various reasons like affordability,
impulsive buying etc. for such a
phenomenon; there is need for a closer
analysis of the trends, as a lot has been
said and written about the non-viability of
discontinuance of Life insurance policies –
for the policyholder as also for the insurer.
It is for the various stakeholders to
introspect on whether we have seen the
last of mis-selling that was said to be the
culprit for poor retention ratios. Wherever
needed, there should be no hesitation in
rectifying the marketing styles of the
distributors, if sufficient progress is to be
registered on this front.
For a growing market where there is a
huge potential for growth, the number of
distributors should indicate a steady
growth over a period of time. In the Indian
Life insurance domain, the steep fall in the
number of agents over the last few years
is a cause of concern as the trend is
inexplicable. Insurers should put in place
systems to ensure that new entrants to
the stream are tested properly for a
sustained professional relationship with
the industry so that the extent of
‘orphaned’ policies is greatly reduced.
Management experts emphasize on the
fact that priorities need to be in alignment
with the varying trends of the market
conditions, rules and regulations. If this
dictum were to be religiously in place, the
unpalatable continuance of operational
losses of several players may have been a
thing of the past. Particularly in the
domain of personal lines of Non-life
business, the need for quality of
underwriting has to be maintained rather
than resorting to a ‘claims underwriting’
or diluting other norms; in search of
shoring up the top-lines. One would look
forward to a quick reversal of such trends.
Emphasis should be on comprehensive
and wholesome assessment of the risks.
‘Trends and Challenges’ in the Indian
insurance industry will once again be the
focus of the next issue of the Journal.
irda journal July 2013

‘Trends and Challenges'

in the next issue...

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