''The insurance schemes launched by the Prime Ministers created the kind of growth in months what has taken the insurance industry years. There is a hint in it as to what the industry needs to do to create growth and appropriate value,'' said T S Vijayan, chairman, Insurance Regulatory & Development Authority of India (IRDAI) at the 17th edition of CII's flagship Insurance Summit. The theme for this year was 'Building Growth, Building Value'.
Vijayan said, ''The trick is to make appropriate schemes easy for customers to understand and if the need arises, to claim it. The purpose of the industry is to cover risk and ride on platforms already created. The Prime Minister's products did this by responding to the ecosystem available. The industry needs to do the same.''
Value is determined by how the money that a customer is paying, is apportioned to cover distribution cost, capital cost, processing cost etc. and how much of it goes to balance premium for the purpose it is paid. The proper appropriation of the proportions for all stake holders will ultimately determine value for everyone. At IRDA disruption is not our aim. We want to bring about gradual changes to give value to all stake holders.''
The IRDAI chairman said that he believes that distribution cost is not maximum load on Insurance companies. The load is created by low volume of business given the fixed cost incurred in building the distribution. Volume is the key to all profitability problems in insurance. He hoped that adoption new technology, easily understandable products, easy to claim and unambiguous products, will help them do this.
Source: www.myiris.com
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