Page 247 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes The recent development in the general insurance sector is the activities by the insurance regulator.
The IRDA has been very stringent and has been keeping a close-watch on the functioning of all
the insurance companies. The latest regulation from IRDA is on health insurance portability. In
the future, general insurance industry will be very much in the limelight than any other industry
facing recession now.
Online selling of insurance policies to discerning customers, who access the internet, will gain
momentum. Typically motor, travel and health policies will be sold more online. Many insurers
have already realised this and are creating separate verticals to exploit this segment. The interplay
of technology and telecom solutions will be a major factor determining the growth of the
industry in the future.
Till recently, micro-insurance on the lines of micro-finance, is thought to be a magic word and
insurers planned to bring retail products to suit this segment. Another area of opportunity is the
government initiatives in health and PA covers for the populace. Rashtriya Swasthya Bima
Yojana (RSBY) schemes and group PA covers sponsored by state and central governments are
providing huge opportunities to insurers. While these schemes provide volumes, pricing and
claims management is critical for success.
The Indian customers are demanding and expect best in class service levels so the entire insurance
industry will have to work towards becoming more customer-centric in the areas of product
development, policy issuance as well as claims settlement. They would need to constantly do
market research to update their products, services and processes to keep up with the changing
needs of their customers.
Completion of 10 years under new regime opens up new opportunities to those private sector
insurance companies which started in 2001. According to law, they will become eligible to raise
capital from public and make IPOs (initial public offerings). Obviously, the promoters would
want to skim the cream; but timing of an IPO is crucial and more importantly, to present the
right financials and a strong-balance sheet is imperative.
The public sector companies will definitely face an extremely competitive situation from the
private sectors and the private sectors will in turn have to prove their competency to gain an
edge over the public sectors and to grab a major piece of the market pie. Another major
development in the future would be the number of private insurers in the space. This is expected
to grow as various foreign companies have announced intentions to establish joint ventures.
Given the low level of penetration in some segments, this trend towards foreign participation is
likely to continue for some time. So, India will witness a major competition in the general
insurance market and this definitely indicates a tough but exciting road ahead for the existing
and upcoming players.
One major problem affecting the industry, like in all developing economies is the shortage of
trained insurance professionals and technicians at all levels. So companies that are able to
recruit and grow talent that continue to provide innovative insurance solutions for the
underserved Indian market will be the ones that will rise and shine in the general insurance
industry. The market is large and set for rapid growth but the ones that take the required
calculated risks, have the right technical expertise, do not blindly go after market share and are
customer-centric in their approach to the market will be the ones to benefit from this growth
and become one of the biggest and best run insurance companies in the world.

Self Assessment

Fill in the blanks:
4. A leading consumer activist has been inducted into the Insurance …………………………..
Committee.

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