Expand existing networks for insurers to grow: Rajiv Takru

Financia service secretary says banking correspondents have also been allowed to sell insurance

Financial services secretary Rajiv Takru on Wednesday said effective utilisation of existing networks of banks and insurance companies would be crucial for the expansion of insurance in India.

Speaking at an insurance summit organised by the Confederation of Indian Industry, Takru said since banks have several rural branches, these should be used effectively.  He added the common Know-Your-Customer norms for insurers and banks were a step in the right direction.     

Banking correspondents have also been allowed to sell insurance. This, said Takru, would aid in insurance penetration.

The Insurance Regulatory and Development Authority (Irda) has allowed banks to become insurance brokers. Takru said this was a positive move as banks would be able to sell products of multiple companies. “There is freedom of choice for the customer, as they can choose a product they require. Nobody should be forced to buy one product in an area, just because there are no other products available there,” he said.

The expansion of existing networks, he said, would also be aided by the opening up of new offices in smaller towns. Takru explained that while the finance minister had called for one office each of Life Insurance Corporation of India and one public general insurer in all towns with a population of 10,000 and above, private insurers should also envisage setting up offices in those areas.

“We expect that others (private insurers) would also open offices in this area. An additional 5000-6000 offices would come up in those regions, resulting in a huge expansion in network,” he said.

Talking about quality, service and delivery in the industry, he said the performance of some players had not been very good.

“Insurance has a social spirit behind it. It is much more than bottom-line,” said Takru. Looking at the number of complaints, especially in areas like health insurance, he said something could be amiss.  

Takru lauded the efforts of Irda’s under new chairman T S Vijayan in being proactive in developing the industry, he pointed that there was always scope for improvement.

For the industry to grow, he said it was crucial for improving returns, both for customers and for companies themselves.