Budget Reactions: Permission to open branches will aid penetration: HDFC ERGO

Mukesh Kumar
HDFC ERGO General Insurance

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“Insurance companies are now empowered to open branches in tier II cities without prior IRDA approval which is a good move and would facilitate penetration without much lag, except that there needs to be more clarity on the definition of Tier II markets. Though even otherwise there were not much delay in getting approvals, but just that with a formality which has been done away with, will some time and effort & and will reduce the to market for the insurance companies.
Now that the KYC of banks will be sufficient to acquire insurance policies, it will cut out unnecessary documentation and bandwidth which goes into compliance with this requirement, this comes as a very positive move for the insurance sector
Any move to increase insurance penetration is a positive move considering abysmally low penetration levels in the country. The move will also facilitate providing customer with multiple choices by the Banks, which hitherto could sell products for only one insurance company.
As brokers now they will be able to sell products for all the insurance companies. Brokers being better equipped professionally, as required by the regulations, it is expected that the quality of solicitation will improve. Since the Brokers represent the customers, it’s expected that the complaints regarding the sales process will considerably improve.”