The Hindu Business Line : `Insurance cos keen to expand, deepen market'

A FEDERATION of Indian Chambers of Commerce and Industry (FICCI) survey on `Indian insurance sector: New avenues for growth' has revealed that 91 per cent of the companies are planning to expand in urban and semi-urban market, while 70 per cent of those surveyed were looking at tapping the rural areas.

More than 80 respondents, which include public and private insurance companies and related intermediaries, including brokers, participated in the survey.

The study mainly focused on the following aspects: growth in the insurance sector, innovations in product development, capital requirement, and new channels of distribution.

It also revealed that the average age of people buying policies is in the 30-40 year range as stated by 35 per cent of FICCI survey respondents. There is therefore a need to create awareness among younger people as that it is the time when they can buy life insurance at much more competitive rates, it stated.

Regarding product innovations, 74 per cent of the respondents said that new products have entered the markets in the life sector.

In the non-life sector, 60 per cent of the respondents were of the view that there has been innovation in this sector.

To tread the path of success, companies will have to move away from the broad-based products to niche and customised products based on the different needs of the consumers as the markets evolve, the survey revealed.

The increase in the service tax from 8 per cent to 10 per cent plus the 2 per cent educational cess in the current fiscal on the risk premium for life policies is likely to impact the insurance industry, the survey pointed out.

Further, 65 per cent of the respondents considered risk premium calculation to be a problem for the purpose of service tax.

Limitation of FDI to 26 per cent is hindering the growth in insurance sector, said 70 per cent of the respondents.

Another factor hindering the growth of insurance sector is the non-flexibility in investment guidelines, it said.

On the issue whether customer service has improved since liberalisation, 65 per cent of respondents placed it in `medium' category.

Another way of retaining the customers and building the brand worth is providing quality service especially at the time of claim settlement.

Almost 78 per cent of the respondents said that claim settlement has eased since liberalisation.

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