Finance minister Pranab Mukherjee on Wednesday urged insurance regulator IRDA to ensure that insurers do not aggressively price products to undercut one another but take a more holistic view to competition.
To ensure prudent underwriting and curbing unhealthy and suicidal competition among the companies through undercutting premiums is something that the regulator will need to address suitably, Mukherjee said while addressing the board of the Insurance Regulatory and Development Authority (IRDA).
More worryingly,the unhealthy competition among the insurance companies in India has started impacting their account books. While de-tariffing (freedom to fix premium) has resulted in significant lowering of premiums for the consumers,the adverse impact is being felt on the insurance companys balance sheet, he said.
The minister also expressed concern over the low penetration of insurance covers in the country. Notwithstanding Indias rapid growth … it has largely remained an under-insured market with financial vulnerability across most of the income segments.
Putting forth possible ideas for insurance products for the low income segments,the minister said,Can we think of a system where in the mass market/OTC vanilla products with low ticket size are incentivised by having a second level of agents with lesser entry restrictions? This will ensure widening the reach of Insurance especially in semi-urban and rural areas. The low penetration in general insurance is primarily because of low penetration in retail insurance product segment.
Mukherjee also directed the insurance regulator to strictly ensure policyholders protection.