The chairman of Insurance Regulatory and Development Authority (Irda), N Rangachary, today offered a few suggestions to Indian insurance companies.
He asked them to develop underwriting skills, which due the monopolistic nature of the market are almost non existent. Rangachary was also critical of the state-owned insurance companies.
At the same time, the Irda chairman asked for a scrutiny of health insurance products sold in the country. He also advised insurers from copying products sold abroad.
"Let's not replicate the products available abroad. The conditions here demand a little more innovation. Study the market closely before launching a product. Simply reintroducing what is available abroad will not give an added advantage," Rangachary said in his valedictory address at the 6th international conference on insurance organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).
Rangachary linked removal of the tariff regime in the general insurance business, proposed for 2005, to the development of adequate underwriting skills.
"In a market-driven system, the present insurers are deficient in upgrading their underwriting skills. There has to be a sustained programme to bring back the dead art of underwriting," he said.
He added that state-run insurance companies often said that they were not prepared for the changes in the sector. "There were four years (since the interim Insurance Regulatory Authority was set up in 1996) for repositioning. If they have not changed then they have not kept to the ground," the Irda chairman said.
On medical insurance, Rangachary asked the industry to take stock of the current products in the market. He said the present system was built on lack of confidence on clients. "The products have been designed to keep claims out of the policy fold," he said, adding that the pricing and working, decided by the industry, must take into account what is happening on the ground.
The Irda chairman also said the Insurance (Amendment) Bill, 2001, seeks to increase the share of stakeholders in an insurance company from 7.5 per cent to 10 per cent.
