Marketing, not FDI limit, important: Irda chairman

Irda chairman comments come a day before meeting of select committee of Parliament on Insurance Laws (Amendments) Bill, 2008

Insurance Regulatory and Development Authority (Irda) chairman TS Vijayan on Wednesday said the percentage of foreign direct investment (FDI) in the insurance sector was not as much relevant in the Indian context as the marketing of the products and the need for professionals who could drive the industry on a higher growth trajectory.

“FDI in insurance is being debated much more prominently than the similar proposals in strategic sectors like defence as if bringing capital is going to solve all the problems faced by the industry,” Vijayan said at the convocation ceremony of the Institute of Insurance and Risk Management (IIRM) here.

The Irda chief’s comments come a day ahead of the meeting of select committee of Parliament on the Insurance Laws (Amendments) Bill, 2008, which seeks to raise the FDI limit in the sector to 49 per cent from the present 26 per cent.

On August 14, the Rajya Sabha adopted a resolution to send the Bill to the select committee after the Congress-led Opposition demanded for the same.

 “It is the purpose of capital that is important and not the capital itself. Some even hold the view that we don’t need capital at all. For instance, the Government of India gave Rs 5 crore capital to the Life Insurance Corporation for the purpose of collecting dividend,” he remarked.

However, he said the Indian insurance sector was attracting lots of investors, which was good for the trained people to seek a career in the sector.

Vijayan said there were some good initiatives such as sale of insurance products on the Common Service Centre (CSC) platform but the numbers were not forthcoming, implying the necessity of a marketing drive, rather than the money, to make it successful.

He also suggested that the industry needed to focus on devising customised products for people whose income levels are higher while keeping generic products for the entry-level customers. Bringing down health costs to make health insurance affordable, focus on disaster management, climate change and the agriculture sector are some of the new focus areas of the regulator, according to him.

National Stock Exchange (NSE) managing director and CEO Chitra Ramakrishna, who was chief guest at the function, said heightened risk in businesses in the past five years was in fact an opportunity for the insurance sector.