New Delhi: Finance Minister P Chidambaram has asked state-run insurers to increase their market share and stressed the need to enhance insurance penetration to attain global levels in a reasonable time frame.
In a review meeting with the heads of public sector insurance companies here yesterday, he asked them to ensure no further market share was lost and the current level of 53 per cent was maintained and steadily improved upon.
The public sector general insurance companies have also shown a growth of 10 percent in gross premium during 2013-14 and projected a growth of 100 percent in the next five years. Profitability of the public sector general insurance companies has also improved in 2013-14. They have however, seen a marginal decline in their market share during 2013-14.
It was noted with satisfaction that LIC has shown a growth of close to 18 percent in First Year Premium (FYP) income during 2013-14 as against 11.57 percent growth of the life insurance industry as a whole.
LIC has increased its market share by FYP by 3.97 percent over 2012-13, from 71.36 percent to 75.33 percent in 2013-14.
The market share in number of new policies sold has also gone up during the period by 1.20 percent to 84.44 percent.
In the case of LIC, it was noted that the persistency of life insurance policies during 2012-13 has improved for the initial post-subscription years but it remains a challenge to maintain this in the latter years of the policy.
Chidambaram stressed the need to study the persistency for ULIP and non-ULIP policies separately, to pointedly undertake focused efforts for each category. It was noted that LIC maintained its excellent claim settlement track record with 99.3 percent settlement of death claims and 99.68 percent maturity claims.
Settlement of motor third party claims through Lok Adalats was identified as a major focus area in the 2013-14 Budget.
It was noted that a settlement ratio of 50 percent of cases referred was achieved through conduct of regular and mega Lok Adalats.
Chidambaram advised conduct of Lok Adalats in coordination with State Legal Service Authorities to increase the settlement ratio further and decrease the backlog.
Chidambaram suggested that IRDA may examine the issue of suitably implementing through its regulatory powers the stipulation of mandatory motor third party insurance and also review the premium rates so as to reduce the burden on insurers.
A decision on the proposal for a three year policy for motor vehicle insurance under consideration of IRDA may be expedited to reduce instances of uninsured vehicles.
It was noted that there was a need to set up/identify the institutional arrangements for investigation and prosecution of insurance fraud, and create the legal basis for it through possible amendments to relevant statutes.
In addition, Chidambaram drew attention to the need for IRDA to create standard templates to facilitate insurance companies quickly launching new products on a “use and file” basis.
Some progress has been made on the life side, which needs to be expanded and emulated on the non-life side.