May 13, 2014: P Chindambaram, the Finance Minister, asked insurance companies to maintain and improve the current level of market share of 53%. State-run insurers are asked by the Finance Minister, P Chidambaram, to raise their market share and stress the requirement to magnify the penetration of insurance to achieve global levels in a reasonable time frame.Read more
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He asked the insurers in a review meeting with the public sector insurer’s heads to make sure that no market share was lost further and the current level of 53 per cent was maintained and also steadily improved upon.
A growth of 10% is also shown by the public sector general insurers during 2013-14 in gross premium and in the next five years, they have projected a growth of 100%. In 2013-14, there is also an improvement in the profitability of the public sector general insurance companies. However during 2013-14, they have seen a marginal decline in their market share.
A growth of close to 18% in First Year Premium (FYP) income is shown by LIC during 2013-14 as against 11.57% growth of the life insurance sector as a whole. The market share has been increased by LIC by 3.97% over 2012-13, from 71.36% to 75.33% in 2013-14. During the period by 1.20% to 84.44%, there is an increase in the market share of number of new policies sold.
The persistency of life insurance policies in the case of LIC during 2012-13 has shown improvement for the initial post-subscription years but to maintain this remains a challenge in the latter years of the policy.
There is a need to study the persistency for non-ULIP and ULIP policies separately according to Chidambaram to voluntarily undertake focused efforts for each category. LIC has maintained its excellent claim settlement track record with 99.3% death claims settlement and 99.68% claims of maturity.
Third party motor claims settlement through Lok Adalats is a major focus area in the Budget of 2013-14. A settlement ratio of 50% of referred cases is achieved by conduct of regular and mega Lok Adalats.
Conduct of Lok Adalats in coordination with State Legal Service Authorities has been advised by Chidambaram for increasing the settlement ratio further and reduces the backlog. In addition, he suggested that the issue of suitably implementing the stipulation of mandatory motor third party insurance through its regulatory powers may be examined by IRDA and it can also review the premium rates so as to decrease the burden on insurance companies. To reduce instances of uninsured vehicles, there may be a decision on a three year policy proposal for motor vehicle insurance under IRDA consideration.
Setting up/identifying of the institutional arrangements is needed for investigation and prosecution of insurance fraud and through possible amendments to relevant statutes, creating the legal basis for it.
Moreover, there is a need for IRDA to create standard templates for facilitating insurers quickly launching new products on a "use and file" basis according to Chidambaram. Some progress which has been made in the life sector needs to be expanded in the non-life sector.
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