Insurance companies need to improve their products and post-sale services to ensure that they are demand-driven, Chairman of Insurance Regulatory and Development Authority (IRDA) J. Hari Narayan said.
He released a white paper on financial inclusion prepared by Ernst & Young at the national conference on “Financial inclusion: integrating insurance into total package”, organised by the Associated Chambers of Commerce and Industry of India (Assocham) here on Tuesday. He said that the insurance companies had to work hard to make insurance a product that was acceptable to all.
Referring to the idea of micro-insurance as a part of financial inclusion, he said that the only difference between micro and macro-insurance was the premium and coverage amount. Companies needed to design the product that was suited to rural customers and the companies must inspire confidence among customers by promptly responding to the claims, he added.
An analysis of the claim ratios between the rural and urban customers of different insurance companies by the IRDA showed that there were very few claims from rural customers, which reflected badly on the acceptance of claims, Mr. Hari Narayan said and called upon the insurance companies to evolve a strategy to address that.
The general public in rural areas had their hopes dashed and belied and so had developed a distrust. The insurance companies needed to redesign their products being marketed in rural areas, he said. He suggested the insurance companies to adopt the lead bank concept and form lead insurer in different regions to ensure better performance.
Noting that the companies were selling group insurances in rural areas where neither the customer nor the group remained the same in the next premium period, the IRDA Chairman suggested that there be a continuity of the insurer with the customer and said that this would help improve the market for the product. There was a need to demystify the insurance product, Chairman of Assocham Insurance Council and MD & CEO of IndiaFirst Life Insurance Co P. Nandagopal said and added that they would work on IRDA Chairman's suggestions.
