By Kamaji Sahay
The inherent orthodoxy of the insurance industry has impacted the existing and the prospective customers in a manner that large-scale conservatism has been the most prominent phenomenon in all insurance transactions in the country.
First, almost nobody is seen initiating a process on his part to acquire insurance protection; and except a very few most of the prospective customers avoid drawing their own road map for buying insurance protection and services.
The insurance providers have failed to match their innovations with the technology introduced in the financial services market for achieving a total paradigm shift. Similarly, customers who are tech-savvy also look forward to somebody visiting them and helping them to decide on buying an insurance policy either for themselves or for their property. This expectation puts a cap on the thinking ability of the prospective customer. This attitude naturally creates a very strong barrier between the insurer and the insured. The prospective customer stops to think and plan about the insurance needed.
Industry not growing much
The conservatism of the industry has therefore been a major reason for the industry not to grow as much as it should have. The growth in insurance business anywhere must be higher than the growth in the gross domestic product of a country. When the economy grows, the uncertainty about property, life and health also grow. But unfortunately, the insurance industry around the world remains stuck to a mediocre performance level and is therefore hardly a significant contributor to the GDP of a country. Usually, industry leaders and regulators focus on refining the traditional mode of distribution and of rendering service to customers. They have adopted technology to introduce accuracy and speed in the existing tools and methods of delivering products and services. There is hardly any distinct initiative on the part of any company in India for making insurance a part of the day-to-day life of an individual engaged in any vocation or even staying at home for supporting various economic activities informally.
Variety of risks
The moment one is born in this world or a product is sold to a customer for any kind of service or value, both the entities get exposed to variety of risks affecting the intrinsic value of the products and the natural ability of a person to create value for himself or others. A product can break, suddenly stop working, may get stolen or may lose its utility value due to a variety of adverse forces including natural calamity. Similarly, a person is exposed to various adverse forces influencing people, environment or society.
His ability to provide for himself and for his dependants maybe severely curtailed by factors such as sickness, accident or even death. But to think about these three factors alone is again a kind of conservatism. The individual’s ability to earn and to contribute to the family and the society is equally affected by risks such as legal and third-party liabilities, risk to property due to natural calamities, currently aggravated by environmental issues and cyber risks in respect of one’s daily transactions on the net. In fact, the risk on one’s life has majorly shifted from death to financial and physical disability with long-term care staring at senior citizens as the greatest protection requirement.
The industry and the customers both need to undergo molting if the insurer and the insured have to emerge as a significant contributor to the nation’s economy as well as to the environment of general happiness in the society. How to do this is the billion dollar question. But not to transform may prove suicidal to the business of insurance by the turn of this century. In a VUCA (volatility, uncertainty, complexity and ambiguity) world, nothing can be taken for granted. Any new financial invention may prove grossly disruptive sending the whole sector into the whirlwinds.
The writer is former MD & CEO, SUD Life and former ED, LIC of India