A matter of concern

Mohini Bhatnagar
26 December 2003

Hyderabad: At the Eighth Insurance Summit organised by the Confederation of Indian Industry (CII) in Hyderabad on 8 and 9 December, there was unanimous concern among the representatives of the insurance industry and government officials that insurance companies are neglecting to adequately cover health insurance and the rural sector in terms of disbursing insurance policies.

This concern was voiced by C S Rao, chairman, Insurance Regulatory and Development Authority (IRDA), who, while acknowledging the significant growth rates the insurance industry has achieved (26 per cent life insurance and 23 per cent non-life insurance) since the opening up of the sector in the last couple of years, regretted that "we are not able to reach the masses in the rural market."

He quoted the recent study by the Foundation of Research, Training and Education in Insurance (FORTE), which found that about in rural areas 73 per cent of the population does not have life insurance and the penetration rate for non-life insurance is only 14 per cent, mainly for motor insurance.

Industry experts warn that urban markets are getting more competitive for insurers and the need of the hour is to aggressively tap the vast and unexplored rural market to take advantage of the rising rural income levels. They say the rural population is an entirely new market due to the conservatism and suspicion of new concepts displayed by the rural populace.

Experts say a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) in association with ING Vysya Insurance said insurance companies need to examine alternative and innovative marketing methods to serve the rural markets. This study also observed that inadequate success in establishing their credibility in rural markets has made life tough for the private insurance players.