The insurance industry is yet to recover from the first major intervention by the Insurance Regulatory and Development Authority (Irda) in June 2010 against the backdrop of large-scale complaints of misselling.

The Sebi and Irda spat provided the immediate trigger, but the reforms that followed the contentious issue of jurisdiction over Ulips were long awaited. It was the issue of restoring faith of the general public in the industry and Irda launched a series of actions to set things right even though they appeared overzealous in terms of customer centricity.

Some reference to what happened in the first decade of the opening up of the sector would be relevant here. The industry leaders, while testing the new turf, slowly but very smartly created some kind of market neurosis where everybody found it easy to sell Ulips and most prospective customers were made to believe that buying Ulip is trendy and beneficial.

Slowly, the insurance element receded to the background and the investment aspect engaged attention of people on both ends of the marketing spectrum. Even LIC, which had acquired enviable expertise and success in marketing life insurance, could not resist the temptation of adopting the tricks of the private sector players for achieving quick success.

Everybody was happy till the economic crisis of 2008 and the stock market downturn made the policyholders gradually realise that they had lost on both counts: investment as well as insurance. The outcry in the market alerted an otherwise bureaucratic Irda and corrective actions beginning with cap on Ulip charges and scrapping of products inconsistent with new formula from September 1, 2010, followed.

When the industry was opened up, the promoters showed preference for successful business leaders or potential young senior executives to head insurance companies irrespective of their field of experience.

Some opted for talent from the financial sector, including banking, but those who felt insurance is primarily a marketing activity picked up CEOs from FMCG, retail and telecom sectors. During the last 12 years, some fell by the wayside and others continued to enjoy a false notion of success till the bubble burst and they are now finding it difficult to get up and move forward.

This is why the revival of the industry is not gaining steam in spite of stimulus provided by the present finance minister and the appointment of an industry stalwart as chairman of Irda. At the root of everything is the crisis of leadership. At the core of the whole business is the ability and commitment to serve. This makes the business a unique one. Therefore, the CEO must adopt the leadership style that supports his business rather than what supports his personality or past notions.

For example, reaching out to people at all levels is very commonly seen in successful life insurance companies. This not only builds trust among different functionaries but also motivates everyone to continue to deliver or produce more and more, year after year. An ivory tower approach is suicidal for this business. The CEOs who share values important to the company with employees and sales team impact attitude and commitment of people across the organisation and significantly reduce the rate of attrition.

Currently, most companies in India are deficient in this regard. The problem is more serious at the front office and the field level. On the other hand, the CEO must be very careful while deciding on outsourcing of various services. What is good for aviation or telecom industry may not be as good for life insurance because in life insurance the company and customer relationship is not transaction or billing cycle based;it is for life and even beyond life.

Distribution being the lifeline of this business, the CEO has to personally plan and execute all his strategies involving each and every employee or intermediary that he interacts with. Failure to grow today is nothing but the outcome of misplaced strategies and execution for which today?s CEOs must take responsibility. The frequent regulatory interference is now an old story. The competition element is also quite subdued today. The time to consolidate and gradually grow is now.

n The writer is former MD & CEO Star Union Dai-ichi Life Insurance