Page 36 - Insurance Times September 2020

increased intelligence and vigilance, particularly in the light errors in our developmental efforts, driven by highly
of several corporate failures witnessed in the past. It is a materialistic interests, have lead to geometric aggravation
repeatedly proven fact, that no amount of oversight can of risks. We are all familiar with the climate change induced
guarantee what a culture and conduct of self discipline and heightened frequency of storms, floods, tsunamis, increased
selfregulation can offer. The repeated failures across the frequency and magnitude of seismic activity, currently
sectors, as well as across the countries has created a greater raging covid-19 pandemic and menacingly spreading
thirst, for sound and reliable as well as intelligible knowledge,
terrorist activities, all of them testimonise the said risk
amongst members of the society. aggravations. Human curiosity in exploring the universe too
is fraught with huge unknown risks. Risks and rewards go
Understanding the environment around us, reacting /
together is a simple fact with no exaggeration. If we wish
responding to its dynamics and proactively initiating changes
to progress we have to take calculated risks and manage
to adapt it to suit our self interest, are unique attributes of them. Therefore insurance, a risk management tool, in all
all living beings. For understanding a subject / phenomena,
its forms, plays a crucial role and occupies an important
there is no method better than the method of comparative
position in the economic activities of today's society
study. Amongst all methods of acquiring and enhancing
irrespective of the nature of its socio-political structure.
knowledge and understanding, comparative method is the
king. Contribution of comparative method to the human
Hence understanding correctly, the different dimensions of
wisdom has been huge and immeasurable. For study of
the role of insurance in socio-economic life, is a matter of
certain dimensions this may be the only method. And in
interest to all planners, administrators, academicians and
others it is used to confirm or contradict the knowledge and
leaders across the society. As said above, the common man
understanding gained by other methods.
too is very much interested in such understanding, as today,
he is not immune to adverse effects of such socio economic
This method is inherent in all spectrums of human life –
set-ups. It seems, there is a need for upgrading the current
social, political, economic, cultural and scientific. All of us
practices which facilitate the knowledge and understanding
are aware of it and are naturally conditioned to employ this of working and efficiency of insurance sector. I think current
method in our day to day life, consciously or unconsciously.
practices in this regard, evolved over the years, can be
The purpose of this write up is to examine different facets
improved to a great extent in the following four areas.
and dimensions of this comparative method in gaining
1. Measurements in Nominal vs Real Terms,
knowledge and understanding of matters relating to
insurance, particularly non-life insurance. While doing so, 2. Inevitable Comparison of Apples with Oranges,
the write up looks at a few past and present practices and 3. Use and Misuse of Aggregation, and
their efficacy. In addition, it attempts to flag the deficiencies 4. Acceptable Standards / Benchmarks of Right Kind.
in such practices for exploring future modifications /
improvements.
Before we dwell upon each one of the above areas, let me
attempt to prove, with few examples, the premise of gap
In our industrialised, technology driven society, though life
has become more comfortable, it has not become riskfree
and is not totally devoid of life crippling risks. On the other
hand over the years, it has grown riskier than what it was,
a few hundred years ago. Though earlier day's life was
characterised / marked by subsistence economy, yet it was
sustainable and otherwise was no less rich and less profound
than the one of today’s advanced and developed societies.
Risks were and are inherent and integral to living and they
will continue to be so.

They might see / reflect drastic mutations with changing
times and environment. So do our perceptions about the
risks. There is no magic wand to ward them off. It appears,

32 The Insurance Times, September 2020