The paper will form the backdrop for a national seminar being organised by the foundation here on Friday on Tariff regime is constraint in the growth of general insurance sector. Minister of state for finance Anandrao Adsul and insurance regulator N Rangachary will speak on the occasion.
An estimated 312 million people in India can afford insurance and have the capacity to pay premia ranging between $100-300. However, the paper has pointed out that only 63 million people have been covered, including those with life insurance. The market has been tapped at less than 10 per cent of its potential, with India at a mere 23rd among the world insurance markets and 0.41 per cent world market share.
The general insurance market generated a premium of barely $2 billion, just 0.4 per cent of the countrys gross domestic product. The unbridged gap obviously represents unsatisfied/untapped demand and an ability to pay. Some international experts believe that the Indian insurance market could reach a ... size of $38 billion, says the paper.
Insurance continues to be a luxury for the non-elite and their business penetration-wise. It has limited exposure, with the products largely available for fire, motor business, earthquake, floods, cyclone, assets, etc. The coverage for day-to-day trading transactions, manufacturing transactions, government-controlled transactions, insurance of fixed assets, government-controlled assets, etc, are mostly untapped, it notes.
The healthy growth of the market shall depend on the affordability of prices, development of a vast product basket, development of market infrastructure, provision of delivery channels including adoption of globally successful model of distribution of products through banks, and the freedom to make available tailor-made insurance products looking at regional, local and segmental needs of the people, the paper asserts.
The protectionists claim extreme posture in the name of security or trust with myopic focus to ensure black results in their balance sheets. Somewhere looms large the belief that if the prices and the product baskets are left unregulated, the competition shall be cut-throat and resultantly, there shall be a surge of claims which in turn could brink them to the brink of bankruptcy, it adds.
The continued tariff regime is neither able to deliver results in terms of quality of products and penetration nor is able to bring efficiency in operations and a competitive environment, states the paper. On lifting of the tariff regime, effective and efficient management would come into real play, it claims.