Post liberalization in 2000 the general insurance industry has been growing at a good phase, presently at around 20 per cent a year. This has brought in a choice of insurers from the customer prospective and also a variety of products to choose from. The industry is one of the highest regulated markets in the world, which brings in lot of security and confidence in the minds of the insuring public.
Whether it is an intermediary who is distributing the insurance products, a person who assess the damage to property (surveyor), an organization which facilitates cashless settlement of medical expenses or an institution that certifies qualified intermediaries are all licensed by IRDA through stringent norms. On the face of it may look to be a tough stick but ultimately brings in a healthy growth of insurance sector in India. Perhaps the regulator can think of an open architecture, where in from the present model of allowing a bank to tie up only with a single insurance company (one life and one general) to a situation where at least three insurance companies each for a bank which will help a long way in the growth of general insurance business simultaneously providing a choice of insurers to bank customers.
Every product to be offered in the market goes through the rigorous process of file and use guidelines where in the regulator goes through the policy wordings and the terms and conditions. They also ensure that the pricing is done through a scientific process as their Actuarial team scrutinizes the product pricing before the approval of the same. The freedom in tariff which allowed pricing discretion and add-on covers to the standard products has been a boon to the Indian customer where he enjoys a better product at a lesser cost.
This freedom in pricing, though has resulted in the growth of the industry, it has been lopsided, with only the motor segment growing and the property and commercial segment have stagnated though the Indian infrastructure is rapidly growing, which is not a good sign. The health insurance sector is yet to really see the untapped potential while considering the Indian population where in the government as well as the regulator can definitely think of incentives for this segment.
IRDA has brought in regulations such as the pattern of investments stipulated by them which the member companies are strictly to abide by. This is one of the reasons the Indian insurance industry was least affected during the economic downturn in 2008. There is also a constant vigil and monitoring by the regulator on the solvency margins, as periodical returns are to be submitted by the insurers where in the minute details of the assets and liabilities have to be disclosed. Very often it is pursued as too much of information required by the regulator but in reality it’s a double assurance to the Indian customer on the health of the insurance companies.
The moment of truth in an insurance company lies in settlement of claims and there are specified timelines to ensure speedy and fair settlement of the same in the Act. The customer in the event of a disagreement in his loss being compensated by the insurance company can approach the insurance ombudsman or a consumer forum where he gets justice.
Recently there have been stringent guidelines from IRDA on the outsourcing of some the activities by insurers and probably a few issues here may have to be reviewed because in today’s world most of the organizations outsource their noncore functions which definitely brings cost saving to the customer.
As per the corporate governance guidelines, there is a board constituted sub-committee to protect the interest of policy holders which periodically reviews the customer service delivery parameters. The recently launched integrated grievance management system by the regulator ensures the customer complaints are redressed at the minimum turnaround time.
Considering the huge rural markets and the affordability of the poor segment of the Indian population, micro insurance is definitely a promising field for the Indian general insurance industry which also caters to the masses which we are sure that IRDA will bring in more flexibility in the distribution models and also incentives for the micro products which will be lightening up of the rural India.
The moment of truth in an insurance company lies in settlement of claims and there are specified timelines to ensure speedy and fair settlement of the same in the Act. The customer in the event of a disagreement in his loss being compensated by the insurance company can approach the insurance ombudsman or a consumer forum where he gets justice.