DSIJ Mindshare

The Changing Face Of General Insurance

Let us start by explaining what general insurance actually means. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of a guaranteed small loss to prevent a large, possibly devastating loss. So, any insurance other than life insurance falls under the category of General Insurance. It includes insurance of property against fire, burglary etc, personal insurance such as Health Insurance and Accident. The General Insurance companies offer policies that cover property against flood storm, earthquake and hull of ships and soon. There is also a Marine Cargo policy which covers goods in transit including by sea, air and road. A major chunk of non-life insurance business comes from insurance of motor vehicles against damages and thefts.

In India, insurance has a deep-rooted history. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. Today there are 27 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country, thus amounting to a total of 51 companies in the insurance business. The Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20 per cent and is said to be one of the fastest growing sectors in India. Together with banking services, insurance services add about 7 per cent to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country. It is believed that Insurance will play a key role in boosting the economy further.

Health Insurance is developing as a separate branch of insurance. Talking about the changes that the health insurance sector has witnessed over the past few years, Manasije Mishra, CEO, Max Bupa Health Insurance says, “The last few years have been busy years for the regulator, government and insurers. Year 2012 witnessed bold proposals by IRDA and 2013 experienced its implementation. Adoption of bancassurance guidelines exemplifies the stated progressive development of the industry. Association between banks and insurers will help to increase the penetration and contribute to the industry’s growth. 2013 was an action packed year from the regulatory perspective and it would be in the best interest to continue with the growth story in 2014. Standardisation of guidelines to eradicate complexities in the insurance policies leading to product re-filing as a mandatory move for the insurers, all such moves have immensely contributed towards increased consumer awareness and improving customer service delivery.”

The scenario in the general insurance business in India is changing. Earlier, it was dominated by Agents and Development Officers. Now, there are a number of distribution channels like corporate agents, insurance brokers, online sale of insurance etc. This is leading to the growth of insurance sector and the brokers are concentrating on serving the customer needs rather than merely selling the products.

Commenting on the growth strategies going forward, Mishra says, “Max Bupa will soon enter the fourth year of business operations and in the last three years we have steadily grown our customer base and product portfolio. We are now the 7th largest insurance company in India in our chosen segment. Our market share has grown from 8.4 per cent last year to 11.3 per cent this year. Going forward, our focus will continue on multi-channel approach. We have already started investing in the bancassurance business and expect that we will be able to maintain our growth momentum. We will continue to introduce comprehensive products based on customer feedback for retail and group segments.”

Interestingly technology is also playing a key role in serving the best to policy holders and providing better knowledge and expertise than agents. Now-a-days the policy holders are less dependent on agents instead, they use services like internet banking, ATMs, ECS, mobile banking etc. 

It is inevitable for every family to opt for suitable general insurance covers. It is important to protect one’s property, which one might have acquired from one’s hard earned income. A large number of people are left homeless due to losses created by earthquakes, cyclones etc. Most general insurance covers are annual contracts. Some policies are given for longer periods, like fire insurance for residences and some for shorter periods, like insurance for goods transportation or for emergency medical treatment during foreign travel.

Here are some of the benefits of insurance to an individual: 

  • It gives you peace of mind 
  • Aversion of risk 
  • Protects mortgaged properties 
  • Tool of savings 
  • Provides self-dependence 

Also, we advise you to invest in insurance policies for the well-being of your near and dear ones.

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