India may get regional insurers soon

India may soon have regional insurance companies operating only in select locations and regions.

In its amendments to the Registration of Indian Insurance Companies Regulations (draft), Insurance Regulatory and Development Authority of India (Irdai) has asked new applicants to specify the city, region or concentration (rural/urban) that they will concentrate on.

Senior Irdai officials said that they would like to have insurers in specific regions.

"Prospective applicants need not open branches all across the country. They can have operations only in few cities or rural, urban centres," according to an official.

For the regions, the options are north, south, east, west and central. Similarly, insurers can give details of which metropolitan city they wish to operate in, including Mumbai, Delhi, Calcutta or Chennai. Their rural, urban concentration can be pre-determined at the time of application for a license with the regulator. 

Industry officials said that while new applicants may not look into having operations only in few metro cities, having a rural or urban presence can in fact help them build a niche. Till now, all insurers have all-India presence though business is generated only from a few cities.

"Out of the fifty plus insurers, each insurance company is strong only in a few locations and regions. Public sector insurers largely have been dominating in the rural areas. It will be beneficial for policyholders if there are new insurers only looking into specific regions,” said the chief executive of a private life insurer.

However, some insiders said that the capital requirement of Rs 200 crore could be a deterrent for small players entering as regional insurers. In its draft, the regulator has specified that irrespective of where they operate, all new entrants into the industry would have to maintain a minimum capital of Rs 200 crore.

Earlier, there were a few interested firms who wanted to enter the industry as regional health insurers when it was proposed that capital requirement will be brought down to Rs 50 crore. Regulatory officials had also decided to give a go-ahead to these firms, but in the end capital requirement was not brought down.

To have a niche category of insurers that differentiate themselves from others, the applicants have also been asked to specify which distribution channel they would use - online, direct, tied-agents, brokers among others.

Source: Business-standard.com

One in four customers unlikely to renew insurance with their existing providers: Survey

One in every four customers are unlikely to choose the same Insurance service provider next time, a study in India has shown.

The 2015 study on Customer Loyalty in the Life Insurance Sector by Indian Market Research Bureau International has shown that 26% of customers are unhappy with their current insurance providers are unlikely to renew their insurance the following year.

Although High Risk customers who choose to discontinue with their existing life insurance providers have halved over the last two years, the survey showed.

Customers' grievances have been resolved significantly and the guidelines set by the Insurance Regulatory and Development Authority are working in favor of the customers.

Customers also seem to be happier with the services being provided to them. They are being reminded of their due dates regularly and are receiving the premium receipts on time for the payments that they make.

"IRDA regulations have had a significant impact on the way insurance players have ramped up their products and services," said, Praveen Nijhara, VP, CSMM, IMRB. He also added that the study provides a thorough analysis of customers' perceptions and it helps companies to reduce the risks relating to potential loss of customers.

Number of customers using the online channel to make payments has also shown a sharp growth.

The report also states that close to 60% customers are Truly Loyal to their insurance providers.Truly Loyal customers are those who are loyal towards a particular brand and are certain to buy more.

Unfortunately, new customers gave low ratings on 'Ease of using the website for transacting'. So the companies are gearing the Agents up on technology to improve their modules on product knowledge and soft skills.

It is also found that customers who bought insurances through agents have weaker perceptions and experiences about the companies. The Insurance sector also needs to focus on the Agents, according to the report.

The report is based on the responses from over 6500 customers from across 15 cities.