Access to Insurance Services The Role of Customers

36 th Annual Conference

of

African Insurance Organisation (AIO) Tanzania General Insurance Corporation of India

Insurance Landscape in India

• India: a vast & virgin market for insurance • Economic Growth has provided the impetus • Freedom to paint the canvas in any way • High growth in automobile & Health care

sector

• Burgeoning middle class with better life-style • Till recently tariff- based with low claims • A long history with solid foundation

2

Pre Liberalisation Scene

•Status of Customers’-pre liberalisation – A case of ‘One Shoe Fits All’. – Traditional & Uniform Policies by LIC &

4 PSUs.

– Virtually no choice for the Customers – Low insurance awareness led to customers not

being aware of their insurance needs

– ‘Take it or leave it’ attitude of the Insurers – Insurance was sold; never bought

3

Post-Liberalisation Scene

•Current Scene & Role of Customers – New players on the scene – Customers are better informed & sensitive – Demand for new, better & variety of products – More players, more competition, customers

benefit

– Changes in economy & social milieu also promote

transformation and growth

– Detariffication reflects growing demands of

Indian consumers.

4

Educating the Customer

•The Regulator •Insurers •Intermediaries – Educating the customers to make them

more informed

– Benefits of taking adequate & appropriate

risk covers

– Non-dependence on the ‘Chance Factor’ – Not only pure products but also pension,

health-care & investment-based 5

Consumer Activism

•Prominent in Health Insurance,

(one of the fastest growing segments)

catalysed by:

– Rising Cost of Medical Treatment – Life Style Diseases – Health Consciousness

•Customers demand for better &

simple products & better services

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Health Insurance -Consumer Activism

• Consumer Fora & NGOs helped in bringing

about changes in the Health Insurance.

– Simple one-page policy – Scope of ‘Senior Citizens’ expanded – Renewal of Policies can’t be rejected – Critical Illnesses are covered – Coverage of pre-existing diseases made possible – Portability of Health Insurance Policies

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Government-Industry Efforts

•National Health Insurance Programme – For less then $ 1 per annum policy holders

entitled to $ 600 of medical care at most public/ private hospitals.

– Launched by Federal Government in

collaboration with Public & Pvt. Insurance Companies.

– Extended to sections other than BPL

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Why Redressal?

– Liberalised Insurance Sector yet to Mature – Transitory & Consolidation Phase – Low Consumer Awareness – Poor Insurance Penetration – Proactive Consumerism in Insurance Missing – Need for Disciplined & Co-ordinated Functioning •

Insurance Regulatory & Development Authority (IRDA) set up

– To ensure a healthy & systematic growth of the sector and ensure that customers get a fair deal

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Consumer Protection Mechanism RTI Act 2005 Federal Government Directorate of Public Grievances Consumer Protection Act 1986 Judicial Courts IRDA Insurer Ombudsman National Commission State Commission District Forum 10

IRDA: the Regulator

Enactment of IRDA Act, 1999 & Constitution of IRDA - An Autonomous body to

• Regulate & Develop Insurance Business • Promote Market Efficiency – Protect interests of Policyholders • Promotion and Regulation of Professional Organisations of Insurance • Regulating Maintenance of Margin of Solvency

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Grievance Redressal Mechanism

Insurer



IRDA (Protection of Policy holders’ Interests ) Regulations, 2002

• All communications responded to in 10 days.

from policy-holders • Guidance on how to lodge a claim.

• Settlement of claim with in 7 days of acceptance of offer of settlement.

• Proper procedures & effective mechanism to address grievances efficiently.

• Information about Insurance Ombudsman communicated with the policy document.

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IRDA: Regulatory Role-



Consumer Protection Insurance Advertisement & Disclosures Regulations, 2000



Protection of Policy holders’ Interests Regulations, 2002



Maintenance of Minimum Solvency Margin



Regulatory Norms for Intermediaries



Licensing of Insurance (Individual) Agents- 2000



Licensing of Corporate Agents- 2002



Insurance Brokers- 2002 13

Federal Grievance Redressal Mechanism

•

Directorate of Public Grievances

• Looks into departments public grievances with government • Headed by a Senior Federal functionary • Public Sector Insurance Companies (Life & Non-life) are part of government •

Right to Information Act 2005

• Redressal mechanism for information from Government & Government owned or aided organisations •

Consumer Protection Act, 1986

• District Forums • State Consumer Disputes Redressal Commission • National Consumer Disputes Redressal Commission

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Indian Insurance Industry

Grievance Redressal Mechanism



Indian Insurance Industry has

 3-tier grievance redressal mechanism  Insurers  Ombudsman  Consumer Forums & Regular Civil Courts

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Grievance Redressal Mechanism

•

Ombudsman Introduction of Insurance Ombudsman-1998

• Quasi judicial mechanism-empowering adjudication of disputes • Adjudication limited to personal lines of business insurance contracts of value not exceeding US $ 40,000 • Award binding on Insurer but not on the insured. Award to be honoured in three months. • Currently 12 Ombudsman across the country • Applicable on both, Public & Private.

• Simple filing procedure & no legal attorney required

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Grievance Redressal Mechanism

IRDA



Grievance redressal mechanism

 Assesses the quality of service provided by the insurers  Identifies grievance prone areas that require Regulator’s intervention  Provides online registration/redressal of consumers’ grievances  Scope for Arbitration and Conciliation options

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Insurance Awareness, Reach & Education

Regulator & Insurers

•

Media Campaigns

•

Standardisation of Policy documents and other literature

•

Updated Web-portals: Online Premium Calculator, Rates & Conditions & Payments

•

24-hour toll free call numbers

•

Implementation of ‘state-of-the-art’ technology

•

Representation of Policy Holders/ Consumer Activists on Board 18

GIC Re: A Profile

• Reinsurance support on facultative & treaty basis for risks in

India & abroad

• Manages Pools- Terrorism Insurance Pool, Indian Motor Third

Party Insurance Pool & Marine Hull Pool

• Diversification in areas of Life, Takaful Re, Liability & Oil &

Energy

• Enhanced Risk Management Capabilities • Value Added Services to Customers • Technical Underwriting aided by IT Tools

   

GIC Re: Ranking & Rating Standard & Poor’s, A M Best & CARE Standard & Poor’s ranking (latest 2007) of top Reinsurers: GIC Re moves to 16th position from 22nd Rated “A-” (Excellent) by A. M. Best for Financial Strength Rated AAA (in) for its Claims Paying Ability by CARE (Credit Analysis and Research Limited) GIC Re is the 5 th Largest Aviation Reinsurer 20

International Business Capacity Foreign Inward Business (Other than Aviation)

Type Facultative Business Treaty Business

Aviation Business

Capacity (PML) US$ 20 Mln US$ 4 Mln Capacity (SI) US$ 50 Mln US$ 10 Mln Type Any One Hull Facultative (International) Airlines US$ 10 Mln Liability (AOO) US$ 100 Mln General Aviation US$ 5 Mln US$ 30 Mln Treaty US$ 500,000 Any One Acceptance

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GIC Re’s Overseas Operations



GIC Re sources its business globally



Branch offices in London and Dubai & Representative office in Moscow



Eventual Reinsurer Status in Brazilian market



Foreign Operations contributed approx. 27% of total business in 2007-08 22

GIC Re’s Overseas Operations



Thrust areas: Far East Asia, Africa, Middle East & G8



GIC Re also holds significant interests in –



Kenindia & East Africa Re in Kenya



Asian Re, Thailand



India International Insurance, Singapore



LIC (Mauritius) Offshore Limited, Mauritius

Business Performance – 2007-08 US $ Mln Gross Premium Net Premium Profit before Tax Assets Investments Solvency Ratio 2,337 2,085 268 9034 7,324 3.36

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