Page 28 - The Insurance Times October 2021

regulator has taken initiative in making the insuring public sum assured in respect of private insurers is much higher
and also the general public knowledgeable about the value but it is doubtful whether these are really used as
of life insurance. The following initiatives taken by IRDAI in savings or protection tool as a large proportion of these
developing the industry is worth mentioning: policies are Unit Linked products where insurance cover
Y Bima Bemisal campaign of the regulator launched both is of "incidental type".
in print and electronic media aims at making the people
Y Thirdly, customers are not too happy about their
understand what life insurance is and how various life
association with insurance policies as more than half the
insurance products can help people make proper policies go off the books even before the expiry of five
financial planning. years (average policy term being 15 years). Even the
Y IRDAI is cautioning the public against spurious phone market leader does not have a high 61 month
calls and fictitious offers made by fraudsters in the guise Persistency Ratio.
of insurance intermediaries.
Y Fourthly, claim settlement performance is not too great
Y IRDAI's customer connect initiative through its portal for the insurers at the moment. Some reputed private
www.policyholder.gov.in is aimed at informing the life insurers have high repudiation/rejection ratio. Again,
insurance customers about the updates about the many claims are pending beyond six months (18.19%).
industry and its latest initiatives. Many of these are even pending for more than one year!

Y As a core committee member of National Centre for Y Customer complaints are too high both for LIC and for
Financial Education (NCFE) among financial sector private insurers. While most of the private insurers have
regulators, IRDAI has taken an important role in drafting been able to reduce the number of complaints
the National Strategy for Financial Education (NSFE), significantly, LIC is yet to do so. Rising number of
2019-2024. customer complaints mean that people are not too
Y IRDAI has advised insurance companies to adopt certain happy with the policy conditions or the quality of
districts for spreading insurance literacy and insuring all servicing.
families of these districts. There are 117 such Y Finally, the insurers have not been able to develop
aspirational districts identified by NITI Aayog which are agents into professional advisors as the productivity of
expected to be covered by insurers (life and general) agents is low and their attrition rate is very high.
under the aegis of IRDAI.
In the light of foregoing discussions and on the basis of
It's clear what is choking the Industry experience of working in the industry for several years,
certain recommendations can be humbly put forward for the
From the discussions in the foregoing sections, it is clear what
insurers as under:
is choking the life insurance industry of India. These can be
Y Insurers need to develop products and services that
summarised as under: customers look for. Let us consider the findings of a
Y The data clearly shows that neither LIC nor the leading
survey conducted by Bajaj Allianz and sponsored by none
private insurers have been able to insure any significant
other than IRDAI. The survey report says that 44% of
portion of the insurable population. There are only 33 Indians are worried about their post retirement days
crores of in force policies in India in the space of
and look for products that can help them build a
individual insurance, pertaining to may be 25 crores of
reasonable pension corpus. The survey also points out
Indians. Even if we assume that about twenty crores of that 1 in every 3 millennials take financial decisions on
Indians are covered by group insurance schemes of the basis of their interactions among peer groups in
various types (including government sponsored social media. This research also points out that 60%
schemes), the total people insured is not likely to exceed Indians believe life insurance is the right vehicle for
forty crores (as many people are covered both by meeting life's goals. Now, the research therefore clearly
individual and group policies). It is estimated that India says that there is a large market for traditional products
has 105 crores of working population. It can safely be but there has to be need based selling. Products can
said that at least 50% of insurable people have not been even be co-created with the customers to improve their
covered under life insurance of any type. worth.

Y Many of the people insured are underinsured. Sum Y IRDAI's own research points out that the insurers are
assured in force for the LIC customers is very low. The not catering enough to the life insurance needs of the

28 The Insurance Times, October 2021