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Changing customer expectations post liberalisation of insurance Sector
A. Lliberalisation of insurance was expected to bring –
Better coverage and penetration
To augment flow of long term financial resources to support the growth of infrastructure
Better services
Efficient claim settlement
Improving customer knowledge and awareness
Some of the amendments added were ‐
Priority to health sector
Policy holder’s funds to be deployed in social sector and infrastructure
Compulsory rural business – cover for unorganized, informal and economically backward class
Fine of Rs. 25L up to suspension of license, in case of failure to fulfill social obligations
B. Customer expectations from Agent / FC / Advisor –
Transparent information on product, commission, benefits and constraints (limitations).
Knowledge and skills to provide customised solution
Regular briefs (visits), underwriting guidance, fund switching guidance, knowledge sharing and
macro picture of general investment options
Renewal Premium intimation and collection
Facilitation during claim settlement
C. Customer expectations from Insurance companies –
Compliance and ‘process’ check on agents
Transparent and trustworthy transactions
Considerate redressal and commitment to promises, particularly verbal. Not to raise legal (proof
seeking) and ‘terms & conditions’ shield at the time of keeping the promises.
Ensuring delivery of renewal notices
Maximum possible modes for payment of premium
Service charge issue to be resolved (who bear the cost)
More distribution arms and customer friendly products
Focus on consumer education and knowledge
Correct insurance disclosures, less of fine print specially ‘devil points’ (like hidden costs,
punishing conditions etc.)
Toll free helpline capable to handle and resolve customer queries and issues
Privilege to change agent in case of compelling reasons
Customer expectations from Insurance companies –
D. Customer expectations from Insurance Regulatory & Development Authority (IRDA) –
Need to play active role as a regulator for benefit of all the stake holders
Need to be tough, knowledgeable (India specific as well as global), customer sensitive and
impartial
Need to improve sector’s image amongst customers as well as peer institutions (SEBI, IT, PFRDA
etc)
Insurance awareness and knowledge spread should be the highest priorities. Direct exposure to
customers should increase substantially.
Serious relook at Agent’s curriculum (pre licensing) and training programs. Agent productivity
and customer satisfaction index are at seriously low levels.
Drive social and rural obligations even more rigorously in letter and spirit
Need to have (and exhibit) better control over operations , customer redressal, products and
compliance (both internal as well as external) of its members
Must have policy towards orphaned agents (FCs / Advisors) and orphaned customers. This
needs to be dealt with utmost urgency.
Tackle issues like poor persistency, high attrition, mis‐selling complaints, lack of transparency,
declining consumer trust etc.
Be proactive and visionary rather than being knee jerk reactive, opportunistic and short sighted
Need to set up system of independent checks and balances, instead of solely depending on the
data supplied by insurance providers.
Need to rework positions on key‐man insurance, employer employee, partial assignment of
policy, insurance as collateral asset; channel specific product differentiation especially in the
context of Indian market and investment culture. The generic approach can be molded a bit to
accommodate some of the customer expectations towards insurance as asset, without
damaging the core spirit of insurance. On the contrary, this might help insurance gel better with
other financial products and services. The issues related to paid up values, surrender values, lock
in periods are reasonably addressed, already.
May be it is important to state that obsolete and rigid actuarial practices along with inefficient
operations are driving premium high and the trend is likely to continue. This is exactly opposite
to the expectations from liberalisation of sector. IRDA need to address this.
Alteration of premium, term, riders and sum assured may be considered in the policy.
Willful representation of wrong premium payment terms by the insurance companies should be
severely dealt with as this is one of the prime reasons for lack of valuations on the basis of
embedded value. The long term ramifications of mis‐represented data by the companies would
be severe.
Company’s balance sheets should include the ‘known’ risk factors, which influence parameters
like Value In Force(VIF), Embedded Value (EV), profitability etc. IRDA must have some
mechanism to verify the data submitted by the members.
IRDA should have the entire data base and analysis, accessible to everybody. Currently the data
available is not comprehensive enough and very difficult to work upon for research and
consultancy purposes.
This compilation was done during the period of January to April 2010. The consultations were held
across the metro, urban, semi urban as well as rural areas. We interacted with customers who were
raging from experts to novices in the field of insurance. This compilation was solely done for internal
purposes only. Though some of the observations are quite harsh and some expectations may be a bit
impractical to implement, it is worth knowing exactly what the customers were expecting.
I am sharing this purely for the understanding and it is not intended to hurt anyone or any organisation.
This report is not a judgmental call on operations of any entity but represent the derived inferences
from the available data and information.
Hope this is of some use to you.
Warm Regards,
Girish Tiwaskar
Arthashay Training and Consultancy Services
M. ‐9890 979711