1273586, Neha Aggarwal, F2, comment on slowing growth on insurance?

INTRODUCTION

Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. In return insurance premium is required to be paid. There are many factors to examine when looking at insurance companies. More than anything, both consumers and investors should concern themselves with the insurer's financial strength and ability to meet ongoing obligations to policyholders. Poor fundamentals not only indicate a poor investment opportunity, but also hinder growth. Nothing is worse than insurance customers discovering that their insurance company might not have the financial stability to pay out if it is faced with a large proportion of claims.

Discussion

Some of the reasons for slow growth of insurance are as follows:

1.     Lack of structuring awareness by insurance companies.

2.     Setting simple terms and conditions which ill-literate masses could understand, this was also not done.

3.     Lack of willingness to spend on insurance products like accident or mediclaim policies.

4.     Masses do not have such attitude.

5.     Mind frame is such that “after term the money is lost”

6.     Lack of effort shown by General Insurance Companies, life insurance still works well in India but general sector needs to aware masses about their product.

7.     In India, Insurance is generally seen as an investment. Not much concerned about getting insured.

8.     Tax benefit u/s 80 c is what most of Indians look at.

9.     Information spread by agents and misleading advertises by insurance companies.

 Conclusion

Insurance company should not mislead their customers .provide accurate information to the masses .With the continuing expansion of the economy envisaged in the next decade, a large proportion of the population will have higher per capita income and the ability of the insurance industry to mobilise a significant share of this disposable income will depend on the ability of insurers to maintain their competitive positions within the rapidly changing financial environment. Thus, the industry must strive to achieve better resilience to meet the challenges ahead.