Protection Fund Has Few Takers

Insurance companies are not too keen on the Insurance Regulatory and Development Authority's (Irda) plans to set up a policyholders' protection fund.

A senior official from a new private sector insurance outfit said: "It is too early to set up a fund and there is also the moral hazard to be looked into. Prudent insurers might end up, taken the brunt in the case of some insurance companies, taking a hit due to reckless investments."

The insurance firms hit out at various tariff-based products, including mediclaim and auto insurance. They said the price did not justify the risks or service demanded by the public.

This was part of the discussions during a closed meeting of Irda chairman N Rangachary with chief executive officers (CEOs) of public sector and private insurance companies, as well as consumer forums, in Mumbai on Monday.

Rangachary said the meeting allowed consumer forums to air their grievances against insurers. He hoped that the new companies would not follow the same pattern.

"Consumers expect better accountability. Insurers stated that they would be able to act on their expectations," said Rangachary. Round one of consultations with consumer forums was conducted as the Irda hopes to finalise regulations pertaining to customer protection, which are at present in the draft stage.

HDFC Standard Life managing director Deepak Satwalekar, who was present at the meeting, said through the meeting insurance companies could know the expectations and requirements.

Demand for simplicity in documentation and language was upper most in the deliberations. However, Satwalekar stated said: "Customer service would be driven by the education and training imparted to the agents."