Home / Industry / Banking /  Spurring distributors, right products key to insurance growth: IRDA chief

Mumbai: T.S. Vijayan, chairman of the Insurance Regulatory and Development Authority (IRDA), on Friday urged the industry to introduce products that would widen insurance coverage.

“For instance, today we have around 20 crore vehicles while the number of policies issued in the motor insurance space stands at around 8 crore. In health insurance, too, there is a similar gap," Vijayan said at the 18th Insurance Summit organized by the Confederation of Indian Industry (CII).

“So, if the industry aspires for a five times growth in the next decade, the key challenge for industry will be to launch the right products to provide appropriate cover to the people, work on ways to distribute insurance products at a larger scale through more channels of sale and settle claims faster, utilizing additional mediums," he said.

Vijayan also emphasized the need to incentivise distributors adequately to help increase the reach of insurance and improve the persistency ratio—the percentage of policies remaining in force.

“People have criticized that insurance companies charge a very high upfront commission to pay their distributors. I have a different view. We may have a lot of online modes to interact. But it is the distributor who engages with the customer and stays with the customer after selling the policy. So if we are talking about taking insurance to the uninsured population and ensure that the policyholders stay with the insurance company after buying the policy, unless we compensate the distributors with sufficient commission, how will it work?" Vijayan added.

Some insurance firms pay their distributors a fixed remuneration to ensure a high persistency ratio, Vijayan said. Additionally, he said, companies should look for more channels to sell insurance policies and settle claims.

“Today, so many people use mobile phones. Is there a way for companies to tie up with these mobile service providers and allow them to buy insurance policies and make subsequent payments by shelling out a part from their prepaid phone bill. Also, the number of transactions through POS (point of sale) terminals has gone up substantially. Can insurance policies be sold transparently through these POS terminals? We have to ask these questions if we are talking about a five times growth in the next 10 years," he added.

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