Life insurers propose SRO

The Life Insurance Council, which has all the life insurance players in India as members, is recommending the creation of a self-regulatory organisation to ring in discipline into the life insurance industry.

"In the next 12 months, we hope to set up this organisation that will not only bring into focus the agenda concerning the life insurance sector, but also create opportunities for pre-emptive regulations. Risk-based capital can be the first area of focus for the organisation," said Anuroop Tony Singh, a prime mover behind the move and also the vice-chairman and managing director of Max New York Life Insurance Company Ltd.

Speaking on the sidelines of the recently concluded international conference on insurance, Singh said that his company, Max New York planned to infuse fresh capital of Rs 100 crore every year.

At present Max New York new has a capital of Rs 366 crore. "We aim to double our growth rate every year," he added.

"Around 96 per cent of our product portfolio consists of whole life and endowment policies and there is a huge difference in the quality of products that we offer as compared to other life insurance companies. That is why we play a dominant role in the Million Dollar Round Table "" a premier association of financial professionals," pointed out Singh.

"We currently rank fifth in this sector, though I suspect that we may actually be ranked higher. The parameters of ranking should be changed and should comprehensively include productivity, persistence, profitability, variety of products and case sizes for credible results," Singh added.

"All cash received is recorded as premium though it includes gratuities also. This is incorrect internationally. Nobody is happy with the current method of calculations and we should ensure that the numbers registered are divided into sub-categories of group insurance, unit-linked policies and so on, for a clear picture," said Singh.

Speaking on the current trend in the insurance companies on focussing on the rural sector, Singh said that life insurance policies can best be sold in this market through face-to-face interactions.

"Self-help-groups and NGOs can also offer good opportunities in tapping the rural market. Besides we can also identify group patrons in this sector. The government however needs to provide a social security scheme for people below the poverty line," he added.

Regarding the tax treatment of life insurance products and companies, Singh pointed out that besides promoting tax compliance, tax incentives can help in infrastructure development as life insurance involves long-term liabilities.

According to Singh, brokerage was more efficient in non-life insurance sector because of the transaction size.

"Banks have a huge opportunity in general insurance brokerage because of their large corporate clients," he added.