Union Minister for Civil Aviation Mr. Praful Patel has said that the speedy growth of the insurance industry is vital not only for providing financial security to people but also for generating investible resources for funding the much-needed infrastructures in the country.

Mr. Patel was delivering the inaugural address at a Conference on “Vision for Indian Insurance Industry” organized by Indian Merchants’ Chamber at Hotel Hilton Towers in Mumbai today.  Among others who spoke at the inaugural session included Mr. Deepak Parekh, Chairman, HDFC Ltd., Mr. Niraj Bajaj, IMC President, Mr. M N Chaini, IMC Vice President and Mr. Prabodh Thakker, Chairman of IMC’s Insurance Committee.

The Minister said : “The insurance business has the potential to drive economic growth of the country.  This has been amply proved by the international experience.  The enormous amount of long-term investment funds needed for development of the infrastructural sector can come only from the insurance industry and pension funds, which are long-term finance by nature.”

He said the untapped potential for growth of insurance industry in the country was huge, as the penetration of insurance in India at present was very small, compared to developed countries. 

Mr. Deepak Parekh said that trust was the foundation of the insurance business, and trust was always a fragile commodity and could be built by honest conduct only on a long-term basis.  Even while ensuring this key factor, the Insurance Regulatory Development Authority (IRDA) must address the solvency margin norm of (150%), and must reconsider it, because after all insurance business was required to survive by competing with other financial instruments.

Mr. Parekh advised that insurance companies should adopt modern risk management techniques, avoid “mis-selling” their products, and accept international accounting standards and norms.

He suggested that insurance companies should engage in some heart-searching as to why the ratio of lapsing policies was as high as 30% to 35% among some of the companies, which rendered those companies unviable.

Mr. Parekh said the investment norms for the insurance industry fixed many years ago needed reconsideration.  “Detariffing of the insurance industry in a calibrated manner by the regulator is imperative.  It will be good for the industry and for the country, if it is implemented in a right spirit, so that the sectoral cross-subsidization in the general insurance could be ended,” he said.

Mr. Niraj Bajaj said that opening up of the insurance industry had changed the market dynamics and not only the numbers and the volumes had grown , but the consumers had also benefited, with a wide range of products and services that matched the needs and convenience required by the end consumers.

“Arrival of competition from the private sector has helped insurance market grow aggressively and brought the customer in focus.  The companies are bringing in the flexible products and services to woo the customers,” he said.

Mr. Prabodh Thakker said most victims of the Bombay train bomb blast did not have any insurance cover.  “We have brought out a study in this respect, which only went to show how important was insurance cover for common people in cities like Mumbai,” he said.

Sourced From: Pressman India