IRDA (Insurance Regulatory and Development Authority) chairman J Hari Narayan 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) in Hyderabad on 15th May. Mr Hari Narayan said that the insurance companies need to improve their products and post-sale services to ensure that they are demand-driven.
Elaborating on the role of micro-insurance as a part of financial inclusion, he said that the difference between micro- and macro-insurance was the premium and coverage amount. Companies need to design a product that will meet the needs of rural customers. They must also create confidence among customers by promptly responding to their claims.
An analysis of the claim ratios by IRDA between rural and urban customers of different insurers showed that there were very few claims from rural customers, which reflected badly on the acceptance of claims. Mr Hari Narayan called upon the insurers to evolve a strategy to address that.
The public in rural areas had their hopes belied and so had developed distrust against insurers. The insurers needed to redesign their products being marketed in rural areas. They need to adopt the “lead bank concept” and “form lead insurer” strategy in rural areas 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.