Insurance sector needs positive enablers, say industry honchos

India's insurance industry needs positive enabling factors in the form of increased competition, outreach personnel and an easing of the regulatory regime to achieve greater penetration, according to two senior industry executives at a recent conference.

The issue of underpenetration stems from problems of outreach rather than a shortage of demand, reported The Economic Times which covered the Times Network India Economic Conclave 2019, that discussed the role of the insurance industry in helping India become a $5tn economy.

Mr Vipin Anand, MD of Life Insurance Corporation (LIC), said during a panel discussion, "India is a huge country with diverse demographics. If we can ensure a network of agents that can reach every nook and corner of the country and sell policies face to face, the target of selling INR100bn ($1.39bn) worth of life insurance policies can easily be achieved."

Comparison with China

On the panel with Mr Anand, Ms Vibha Padalkar, MD and CEO of HDFC Life, compared India's insurance industry to that of China, adding that there is much to learn from the neighbouring market.

China's insurance penetration level is four times that of India and the Chinese market has four times the number of agents working in the field selling retail products, said Ms Padalkar suggesting that there is huge potential for the Indian market to expand given India's favourable population demographics.

Mr Anand added that the if Indian insurers, which have around 2m agents working for them, can add 5m more such agents, it will address the problem of underpenetration while also creating ample employment opportunity aiding the country's economy in a more holistic manner. He also said that the insurance industry in India needs to have further competition to be able to expand the customer base. "China has almost the same population size as India. However, they have 100 companies competing in the life insurance market as against 24 that are operating here," he said.

The panelists suggested that relaxation of regulations can also help the Indian insurance sector cover a wider consumer base. This includes easing customer authentication models via a unified KYC; allowing life insurance companies to sell health insurance products, decreasing tax deductible at source (TDS) on pension plans purchased by non-resident Indians and relaxing minimum policy tenures from the current seven years to get more millennials to buy protection.

Source: Asia Insurance Review