The Hindu Business Line : Insurance is a matter of trust

There have been many anxious queries in various blogs as well as in the popular search engines as to the true meaning and import of the ubiquitous blurb (or is it a warning?) in insurance advertisements and Web sites: Insurance is the subject matter of solicitation.

Varied explanations

The explanations have predictably been varied, which normally happens when there is no authentic light shed on an issue. One says it means no one should take offence should one be bombarded with solicitation from competing insurance companies.

LIC’s Web site by far sheds the best light on the issue by saying that insurance being the subject matter of solicitation, no one should go by the standard information given by an insurance company on its Web site and other media but, instead, sit across the table with an agent and tailor a policy to one’s requirement.

A new meaning

LIC, then, has given a whole new meaning to the term ‘solicitation’ by equating it with customisation, which is when one goes beyond a standard product or service and negotiates a special package. LIC, then, has turned not only the word ‘solicitation’ on its head, but has also disowned the widely-prevalent practice of insurance agents canvassing for custom.

Come to think of it, the LIC stand is of a piece with the stand of the professional bodies such as those for chartered accountants and advocates which, taking the moral high ground, ordain that their members not seek out clients but, instead allow the latter to come to them.

LIC’s spin to the term solicitation, therefore, is bound to invite reactions ranging from downright cynicism to admiration for elevating insurance to the levels of Ivy League professions. The truth, however, is that insurance is only as much a profession as the ubiquitous mom-and-pop stores. Insurance is very much a business; let’s make no bones about it. But, at the same time, the LIC stand — there is nothing like a standard product — though not borne out by the reality, is worth following. One hopes the insurance major walks the talk.

A question of faith

Incidentally, students of law and insurance are bound to be a trifle nonplussed by the blurb/warning. All along they have been told that insurance is a contract of uberrimae fidei — of total good faith. And the insurance world too has all along been sustained on the staple of this legal maxim though, on occasion, lack of good faith from both the sides has marred things — the insured not coming clean on, say, the matter of an existing disease, in the case of medical insurance, and the insurer constantly looking for escape routes.

It would be in fitness of things if the Insurance Regulatory and Development Authority (IRDA) steps in to elaborate upon the rather terse and cryptic mantra of insurers — insurance is the subject matter of solicitation — because no one is sure whether this is a sales pitch or words of caution.

(The author is a Delhi-based chartered accountant.)

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