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The life and non-life insurers will have to incur additional expenses to implement the new guidelines on distance marketing of insurance products released by the Insurance Regulatory and Development Authority (IRDA)
There is also a possibility of passing this higher cost on to the customers in some cases such as health insurance, according to industry sources.
Some key points in the guidelines, released last week, include mandatory employment of only trained telemarketers, and recording and preservation of all calls.
In the Unit-Linked Insurance Products (ULIPs) segment, soliciting of non-single premium type for annualised premiums exceeding Rs 50,000 over telephonic mode (voice as well as SMS) was barred.
“The cost for insurers will go up in implementing these norms from October 1, 2011, along with the operational requirements,” Mr Suresh Agarwal, Executive Vice-President, Kotak Life Insurance, told Business Line .
The companies would have to spend time, effort and money on preparing the call scripts, recording and storing them as per the norms of the Telecom Regulatory Authority of India as well as IRDA.
“But in the long term these norms are good for the customers,” Mr Agarwal added.
According to a spokesperson of Bajaj Allianz Life Insurance, the guidelines were “less harsher” than expected and would eventually pave way for increased customer-benefit.
“The problems like miss-selling are likely to be addressed in a better fashion now as there would be recorded evidence. The big ticket policies would generally be sold more in person, anyway,” he added.
HEALTH INSURANCE
Experts in general insurance say that the higher costs may be more ‘serious' and it could as well be passed on to the customers.
“The operational aspects in areas such as health insurance will become tougher. For instance, the marketing teams will need to be very clear on all exclusions (in cover),” Dr Amarnath Ananthanarayanan, Chief Executive Officer, Bharti AXA General Insurance, said.
“There could be slight increase in health insurance costs, by about two per cent, due to increase in costs. This is the cost to pay for transparency,” he added.
According to industry estimates, about Rs 2,000 crore and Rs 5,000 crore business comes from distance marketing in life and general insurance segments respectively.
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