FM request for simplicity gets complex answers
P Chidambaram fires a salvo at the insurance industry asking for simple products that can be understood by common people, report HT Correspondents.business Updated: Jun 16, 2008 20:25 IST
Finance minister P Chidambaram fired a salvo at the insurance industry asking for simple products to be designed that can be understood by common people. He was speaking at the launch of the HSBC-Canara-Oriental Bank of Commerce launch of their life insurance venture.
"Plain vanilla is still the best flavour for an ice-cream," he said quoting an analogy. "People in India are simple folks, who work hard and save. I believe that simpler the product, better will be the reception."
Those selling insurance products to rural customers, should understand their language, attend to their concerns, he said while stating that products should be such that they could easily comprehend and claim benefit quickly.
“The finance minister’s quest for simplicity is well received,” said SB Mathur, chairman, Life Insurance Council and former chairman, Life Insurance Corporation. “Life insurance companies have reached out to rural parts of the country, unlike the mutual funds industry, whose revenues and subscribers are mostly based in cities and towns.”
Servicing such a network, he said, involves costs. “One has to depend on agents for reaching out to rural parts of the country.”
That products need to be simplified is well understood by the industry. “We are already simplifying our products and working on it further,” said P Nandgopal, chief executive officer, Reliance Life Insurance. “Our micro insurance product which we are working on will be fairly simplified.”
A top insurance industry official, not willing to be quoted, was more candid: “Insurance products are being launched keeping agents in mind due to their unreasonable power and influence.”
What consumers need while buying insurance products is protection, which only a term policy offers. “Insurance companies must sell term insurance products to people who are looking for insurance,” said D Sundararajan, a Mumbai-based financial planner.
(With agency inputs)