Page 28 - Insurance Times December 2018

important criterion for judging whether the product
deserves to be in the market?

It is in such products that the role of the Regulator becomes
more pronounced. Mere compliance with IRDAI Regulations
on the content of policy does not justify an insurance
product. There has to be a valid case for meeting customers'
needs too. This is particularly important in a market like
India, where people have limited purchasing power to buy
insurance products and the reputation of insurance industry
in the eyes of people is very poor. Let not the industry's
reputation be put at risk by such products. Let us not forget
that the ULIPs fiasco severely dented the reputation of the
industry and the regulator.
policies despite clearly knowing the sales potential? Or do
the insurers genuinely believe that such policies are the Conclusion
demand of the day and the market would just lap it up? In Indian context, it would make sense, if the insurers design
What is interesting is to see how one insurer after another policies which fulfil real customer needs and the regulator
is coming out with such products. May be it is just a fad, will have to make a choice whether this criterion is being
and a quick way to gain attention in the market. Or maybe fulfilled or is merely a marketing gimmick.
it is just the product numbers that the insurers care for?
Innovation has to significantly add to customer welfare.
What is the Regulator's Role? What drives good innovation is the deep desire to meet the
customers' needs through value adding products and also
What is somewhat surprising is the Regulator's approval for to ensure that the credibility of the insurer and regulator is
these products. Its no longer the case that these are the
maintained. It has to address the needs of the people and
early days of health insurance rush and the market can
fill gaps left by traditional insurance or Government support.
afford to have any type of health insurance product. This Innovation, at the same time has to be such that the
was the rationale in the earlier years when the health product provides protection to reasonable number of
market was beginning to spurt and grow. The market has people. Mere window dressing with number of products
matured now and there is a considerable body of data with hardly any market acceptance is to be avoided so that
showing the customers' needs, type of products that people are not confused with large variety of products.
command good consumer acceptance and reasons for
same.
Time has come for the regulator to see if this is happening
and if not, weed out unwanted products. Regulator needs
The regulator's foremost duty is to protect the interest of to seriously examine business projections made by insurer
customer. Is the customer interest protected by such and compare with actual performance of the product. A
products? Given the contours of the product discussed certain number of years say 3-4 years can be given for the
earlier, does selling these policies qualify as mis-selling? product to succeed otherwise it should be pulled out of the
market. This is very important for a country like ours where
In my view, very clearly, these products do not help the the financial literacy and that too insurance literacy is very
cause of customers. It is also questionable, whether a mere poor. Customers should not be confused with too many
increase in the number of insureds or products, indicates meaningless product choices.
the growth of health insurance? Does this in any way ensure
adequate coverage to the unsuspecting customers? Half-hearted commitment neither serves the customer nor
Insurance contracts are one of 'Utmost Good Faith' of both the insurer. Insurers have to realise that they exist because
the parties. What utmost good faith is the insurer displaying the customers exist. The purpose of insurance is financing
when it markets and sells such narrow covers to the the healthcare needs of the customers. If that fails,
customers? May be the customer has satisfaction of having customers are bound to reject it and it will only lead to an
a health policy, but in reality the cover is so narrow that it atmosphere of mistrust against the Insurer and industry.
becomes meaningless. Shouldn't 'customer utility' be an That is something we can ill afford! 

28 The Insurance Times, December 2018