Be it the evolution of new channels of distribution or innovative product development or the optimal use of the latest state-of-the-art technology, the central theme is the customers choice and his/her convenience. Competitive pricing, value for money for the customer, high service levels, upgrading the quality of agents, back office and front office staff, consumer awareness and sensitive and prompt response to the consumers grievances are the other features of this market which can easily be discerned.
The market seems to be expanding and growing but only in depth and not the width of coverage. Such growth rates, however, can be sustained only by reaching out to newer markets. And no concerted effort on development of new markets has been seen so far. LIC has responded well to competition, the decline in its sales figures, post 2002 have been on account of removal of its high selling single premium, guaranteed products. It has shown impressive growth in its traditional product sales.
In non-life sector, the challenge seems to be more daunting. Not only the retail market has not been impacted in any perceivable proportion, the levels of awareness and also the standards of customer services, as perceived by the general public, are pretty low. This needs to change.
There certainly has been a plethora of new and innovative products offered by both, LIC and new players, in the life sector. LIC has the widest range of products and customised solutions for the customers. Public sector non-life companies are yet to get their act together.
This is an area where new companies are clearly ramping up by bringing in their global best practices, operational efficiency through technology etc. Public sector companies are fast gearing up. However, a lot still needs to be done in this area as is evidenced by the FORTE survey. The real time response and turnaround times in delivery of the services have to be up to the customer expectation levels in areas like delivery of first premium receipt, policy document, premium notice, final maturity payment, death claim etc.
The quality of advisors has certainly undergone a change in terms of their profile, education and approach to business, being more professional. Tax-based selling of insurance is slowly being replaced by need-based selling. The study revealed that the customers experience with the LIC agent in the post-liberalisation period is quite satisfactory. However, as also evidenced by the FORTE study, there still exist rampant unethical trade practices like rebating, misrepresentations etc. The advisor is expected to give complete information on all products and not just push high commission products, give information on new products/services, premium payment reminder and be actively involved in assisting the claimants for death claims settlement and lapsed policy revivals.
There has been a number of bancassurance tie-ups in India, for both public & private sector insurance companies, but the model is still in its nascent stage of evolution. The way bancassurance is evolving in India, it seems to be heavily dependent on the replication in some form or the other of the traditional Tied Agency arrangement. It has not, so far, led to sale of insurance products off the shelf by the banks, at least in any substantial measure. I believe that bancassurance could grow faster if accompanied by active commoditisation of insurance products.
In conclusion, it would be fair to say that competition has done well for the customer by giving him more choice, but still a lot needs to be done. The players, both public and private sector, have certainly ramped up their operations and bringing in best practices for the benefit of all stakeholders.
The writer is executive director, FORTE