Insurance companies should also explore a bankinglike correspondent model to boost penetration of insurance products in the country, said J Hari Narayan, chairman, Insurance Regulatory and Development Authority (IRDA).
“It is feasible to have a well-mentored agency model including the business correspondents and the tied agents for distribution of insurance products,” said Narayan, while addressing the Confederation of Indian Industry’s (CII) 14th Insurance Summit.
In order to increase the penetration of banking services in the rural areas, Indian banks have adopted low cost business correspondent model in which a person, with a help of handheld device, provides the basic banking services in the villages.
He also suggested that the industry could adopt the concept of “Lead Insurance” on lines of the RBI’s Lead Bank Scheme to ensure continuous engagement of crucial products like those of health insurance.
He further added: “The industry should focus on the appropriate ticket size that promotes economy of scale and reliability of operations.”
He also highlighted the importance of increasing the penetration of micro insurance products through continuous engagement with customers. He added that there is a lack of efficient delivery of the products by the industry and hence, rural and social sector obligations may suffer.
Ashvin Parekh, partner and national leader, global financial services, Ernst &Young, stated that in the past a lot of attention has been devoted to the investors but equally important are the areas of product designing and distribution. He expressed that it is time that once again the industry works in close association with the regulator and helps it with the tasks of insurance penetration.
SB Mathur, secretary general, Life Insurance Council said that Direct Tax Code (DTC) needs a review given that it is based in the older tax regime where insurance and mutual fund products overlapped.