This refers to the report “Insurance: Under the new regime” (March 30), which appeared in the supplement issue of Business Standard — Insurance Gazette. It has been observed that many companies have shut unproductive branches and retrenched employees. Even as the insurance industry has to keep important aspects like the cost of operations in mind, it must not ignore the need to bring insurance benefits to rural households. Even the banking industry faces similar issues after 40 years of public sector banking and more than a decade of the opening of new private sector banks. However, overall objectives of the state cannot be sacrificed on the altar of profitability. This is an issue that insurers should not lose sight of.
The article also referred to the industry growth matching GDP growth. A better index of measuring the progress of the insurance industry would be to relate the proportion of the total business in force to the national income, as is done in the US. Another effective way would be to relate the annual premium income to the financial savings of the country, which the Reserve Bank of India publishes annually. These indices will show the extent of progress of the insurance industry since its inception.
It should also be noted that the government appointed the Morarka Committee in 1967 to examine the pattern of expenses of the insurer. A similar exercise with respect to private insurers would be advisable, especially in the context of further liberalisation.
S Subramanyan, Mumbai
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