Mukherjee urges insurance firms to reach the masses in rural areas

Finance Minister Pranab Mukherjee today said one of the important challenges before the insurance industry was to generate the required level of awareness about the benefits of insurance to the people, particularly those living in semi-urban and rural areas.

"It should be our endeavour to take all necessary steps to ensure the reach of insurance to masses," he said in his address to the Global Insurance Summit organised by ASSOCHAM here.

He said that, to meet their rural and social obligation, the insurance companies were now increasingly tapping the semi-urban and rural areas to spread the message of protection of life and property through insurance cover. The Government had also introduced many special products aimed at the rural markets, he said.

"One of the main objectives of promoting financial inclusion packages is to economically empower those sections of society which are otherwise denied access to financial services, by providing banking and credit services thereby focusing on bridging the rural credit gap," he said.

Mr Mukherjee said lack of protective elements might not serve the objective of promoting financial inclusion packages as the targeted section may fall back into the clutches of poverty in the event of unforeseen contingencies. Hence, to provide a hedge against these unforeseen risks, popularization of micro-insurance was one of the essential ingredients of a financial inclusion package, he said.

He said the opeing of the insurance sector and the entry of private sector companies had led to the intensification of competition.

"There is now a sense of benchmarking globally which is indeed a very healthy trend. This has resulted in development of new insurance products, reduction of premium, improved customer service, increased visibility through print & electronic media, discussions, symposia and seminars etc. ultimately benefiting the insuring public," he said.

The Finance Minister regretted that health insurance still covered a very miniscule population of the country and urged insurers to ensure further penetration while keeping premia affordable.

He also urged the insurance industry to prepare to deal with any kind of catastrophic losses. He said the insurance companies should concentrate on exploring the world reinsurance market so that the impact of heavy losses could be mitigated.

"Indian insurers may learn from the global experiences in order to come out with a model that will work for the country," he said.

He stressed the need for better training and professional development programmes for employees of insurance companies. Similarly, he called for the adoption of new technology in the industry.

Mr Mukherjee said insurers must institute efficient in-house grievance redressal mechanisms for policy holders.

Referring to the regulations and policies made by the Insurance Regulatory and Development Authority (IRDA), especially in the area of Unit-Linked Insurance Plans (ULIPs), he said these were in the interest of the policy holders and would help in improving their confidence in insurance products.

"I am happy to note that the insurers have adapted to the new regulations. I commend the regulator and the industry for taking this very positive initiative and am sure that this process of reforms shall continue," he said.

According to him, with rising incomes in the country, the need for insurance is bound to rise and this provides opportunity for the insurance industry to tap this growing need and provide insurance cover both life and non-life to the large masses of this country.

NNN