The Hindu Business Line : Widen coverage in rural areas, Kalam tells NIC

The President, Mr A.P.J. Abdul Kalam, has urged National Insurance Company (NIC), which has completed 100 years, to widen coverage, create a larger pool of policyholders and promote the cause of insurance in rural areas.

NIC will be able to increase its business manifold in the coming days if it decides to take more risks and becomes more competitive. Greater competitiveness will lead to further development for the company, he said.

The magnitude of NIC's operations - considering the number of agents and the amount it has paid out in the past years - is already substantial.

This is expected to increase further. However, the company will have to keep up its standards in terms of costs, quality and time.

These will have to be adhered to even as its business thrives in a competitive, multi-dimensional scenario, the President said.

The insurer will need to tap the potential of rural India - especially so with regard to small enterprises in agro-processing and other segments.

The idea is to empower poorer sections of the society and provide them with greater financial security. This may necessitate specific products for rural markets as well.

While the resources available with NIC may be used for development of infrastructure, the company needs to provide prompt services.

Delays will be counter-productive, Mr Kalam said, referring to a specific instance involving a tsunami-affected family.

There is a need for simple, low-cost products to be made available to the poorer sections, he added.

The President urged NIC to enlarge its base of policyholders, which currently stands at 12 million. This can be shored up to 24 million in the next five years.

The insurer, which has tried to increase the number of people under its risk coverage, needs to take the lead in funding enterprises, perhaps in association with bankers.

NIC needs to increase awareness of insurance products, especially among people living in rural areas. Health insurance cover for the rural population may also be considered.

Demat policies

Dr Kalam advised the company to leverage technology for introducing a dematerialised system of issuing policies.

A paperless mechanism, involving policies issued in an electronic form, will enable easier storage.

The proposed system, which may require a change in the existing regulations, will help policyholders.

Already, modern technology is being harnessed by the corporate sector to issue dematerialised securities of various kinds.

The current system involves issue of paper policies, often considered bulky and elaborate.

It is sometimes difficult to store such documents, especially if the insured entity has to retain them over a period of time.

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