Low Penetration of Insurance in India

India is currently in an unusual state. Despite world’s second largest populous country and with a huge young population (~65% of population lies between 15-35 years age bracket), the inclination towards Insurance has been lopsided towards denial.

 

The recent article in Business Standard articulates this fact. The article states that Insurance industry in India has grown from 2.71% to 3.96% in the last decade. This figure becomes further astonishing when we consider General Insurance (which includes Health Insurance) where the penetration has gone up from 0.56% to 0.78% in the last decade. 

 

 

The biggest reason behind this state of denial by people of India is lack of reforms in this sector. From reforms, I am not talking in context of bringing foreign firms in India and hope the wheel will turn on its own. Rather, what is missing is greater transparency, lack of accountability and pushing the sector on every nook of the country, just the same way banking and telecom made the inroads.

 

If we move back to 2003-2004, Insurance industry saw several Multi National Insurance firms entering Indian markets with various products, built mostly around ULIPs and Market based. But IRDA, which is the governing authority, did not manage the products offered by the private insurers.

 

The charges were exorbitant, and hence, returns sacrificed. The companies built big budgeted marketing strategies and products were pushed down investors’ throats. With the slump in 2008, the fund values of these policies fall drastically by as much as 60-70% in various schemes. IRDA never took any steps to curb the loot by the insurance companies. Though it has now acted through series of steps taken between 2010 and 2013, but by then, investors’ sentiments have been jolted.

 

Let us try to evaluate various factors behind this negativism towards Insurance and how the sector stakeholders can manage them:

 

Make Plans more transparent towards Risk & Return

The biggest problem that an investor faces before buying a plan is lack of clarity on what would be his risk and return on the investment? Though plan brochure speaks about it, but it never gives a clear picture on the kind of returns. We all can see various marketing SMS / Emails speaking about getting several crores by putting few thousand bugs every month!! But the investor is now much mature after being looted in last decade and hence, shows denial towards such plans. I feel what is required here is to clearly speaking about following in the plan brochure:

 

• What exactly are the charges towards providing Risk Cover?? It should not be “X” Rs. per “1000” of Sum Assured. It should clearly spell out in the terms of % of his premium amount. IRDA can design a sheet with various such details for the customer, which will be signed by the investor.
• How much percentage (%) of his premium going towards investing in various segments like Equity Markets, Bonds, etc?
• What are the commission charges paid by the customer to the agent / company?
• Is his Capital guaranteed?
• The Guaranteed Returns should be % of Premium amount and not Sum Assured, as various plans speak because that creates ambiguity.

Commission should increase with policy retention and not vice versa

Currently, huge chunk of commission is given on the first premium and then it gradually decreases with each year. This push agents towards hard selling by pushing the policy inside investors’ throat without considering whether he has the appetite to digest it? Thus, IRDA should make commission structure, just the opposite. The agents should receive less commission in initial 1/3 of the policy tenure and then a gradual increase. I am pretty sure that policy lapsation wil drastically reduced and agents would be actively involved with the customers towards policy renewals.

 

Stringent Regulations and Penalty Clauses for Mis-selling

The insurance in India is not ‘simplified’. The agents too command higher commission stating it is a complex product. But the ground reality is that 9 out of 10 agents even don’t know the basics of insurance. The examination is easy to pass. There are set of questions which is gulped down agents’ throat before sitting out for exam. He clears it without understanding risks & rewards and then becomes “puppet” in the hands of insurance companies. During training sessions, these companies give hard core marketing lessons, often mixing projections with real returns like a fine cocktail and then this cocktail is shared with investors. But like any other hard drink, it end up as an unhealthy product for investor’s investments. Thus what is required is a more stringent guidelines on companies as well as on agents towards mis-selling.

 

• Put the onus on insurance companies to write more vocally in policy brochures on whom to approach in case of mis-selling.
• Define the maximum time needed to resolve complaint.
• Make financial and other punishments more stringent on both insurance companies as well as agents.

Make Insurance Affordable and push it to every nook of the country

Insurance, though is inherent need of any person on earth, yet is not projected this way among the masses. It is still a “push” product as there is a general denial tendency among masses towards insurance. What is the need of the hour is “concentrated campaign” by both govt as well as insurance companies to promote the same, especially in the lower strata of the population where it is needed the most.

 

IRDA should ask every Insurance company to introduce a low-cost Insurance product for lower strata of the population. Also ask the companies to allocate atleast 20% of their marketing budget in promotion of these products for say next 5 years. Simplify the products and make it as easy to sell just like any other financial product such as Banking. This is only possible, if people start understanding “What is Insurance” and for the same, what is need of the hour is the educational campaign. Once people realize that Insurance as a product is as necessary as Bank account and there are plans which are available for say, as low as 100 Rs premium for a month / quarter, then I am sure it will gain widespread and we may achieve target like 20% of the population in next decade or so.

 

This is my view-point on this issue. if you have any comments, then kindly contact us or email us at pcj@growyourpaisa.com

एक मदारी की जीत

एक मदारी की जीत ।

एक मदारी आया, अपने झोले में खूब सारे फल लाया,

दिखा दिखा उसने सब बन्दरों के मन को खूब ललचाया,

"अब सबको मिलेगा फल, अब सबको मिलेगा  बेहतर कल

सब रहेंगे मिल के अब न होगी कोई फ़िक्र।"

पर मदारी की भूख बड़ी थी, उसकी टीम छूप के पीछे खड़ी थी,

जैसे ही बन्दर पास आये उन्होंने जाल बिछाया, 

सबको फंसा पीपल के पेड़ से लटकाया

मदारी ज़ोर से हंसा और बंदरों को बोला,

"हर साल मैं जंगल में आता हूँ, तुमको फल दिखा पकड़ ले जाता हूँ,

तुम कब समझोगे यह फल नहीं जाल है, यह नासमझ ही तुम्हारी हार है । "

यह सुन बंदरों ने एक दुसरे को विवश भरी मंद आँखों से देखा और कहा

"हमारी नादानी शायद समझ से बड़ी है,

इसलिए हमारी किस्मत शायद इस देश की तरह आज इस पेड़ से लटकी पड़ी है,

इस पेड़ से लटकी पड़ी है ।।  "

दरबार साहिब हादसा - सत्ता भोगी भीड़े

ब्लूस्टार ऑपरेशन की याद मे जो दरबार साहिब में महोत्सव रखा गया और उसमे जिस तरह से दो गुट आपस में लड़े वह देख कर बहुत दुःख हुआ  । 

सिख धर्म हमेशा से ही वीर एवं साहस के लिए जाना गया है । पर अफ़सोस यह वीरता देश एवं धर्म की रक्षा की जगह एक दुसरे को मिटाने के लिए प्रयोग करी गयी । वह मंज़र बहुत डराने वाला थ. तलवार लिए शूरवीर एक दुसरे के ऊपर प्रहार  कर रहे थे । एक सच्चा धार्मिक व्यक्ति कदापि एक धार्मिक स्थल पे ऐसा घिनौना कार्य नहीं करेगा । अवश्य ही यह एक सियासी लड़ाई है जिसमे स्वार्थ और सत्ता भोगी अपने फायदे के लिए अपने विपक्ष का नुक्सान करने का प्रयास कर रहे हैं । मुद्दा भी हैरान करने वाला था । सिर्फ माइक पे न बोलने की वजह से यह झगड़ा शुरू हुआ ।  

पंजाब और पंजाबी एक बड़ा ही गज़ब संगम है । बड़बोले पर दिल से साफ़, मेहनती पर सबसे बड़े खर्चीले भी, रात को मुर्गे के दीवाने पर सुबह आलू के परांठे के लालची भी । पंजाबी हो और यह सब खूबियां न हो, ऐसा हो नहीं सकता । इस धर्म और इस प्रदेश ने भारत की भूमि को अनेक खूबियां दी है । 

नए सांसद बने श्री भगवंत मान ने इस मुद्दे पे सही टिप्पणी करी है । वह बोले "धर्म हमेशा राजनीति को दिशा मार्ग देता है । परन्तु कुछ सालों से विपरीत हो रहा है की राजनीति धर्म को दिशा दे रही है । " शायद यह आजकल हरेक प्रदेश और धर्म में हो रहा है । कुछ सियासतदार मुस्लाम के रखवाले बन चुके हैं, कुछ हिन्दुओं के, कुछ दलित के, कुछ बंगाली के, गुजराती के वगैरह वगैरह  । बाबा जी से दुआ है की इन सियासी लोगों को सद्बुद्धि दे ताकि जिस देश को सबने मिलके आज़ाद कराया है उसको अब फिर से कमज़ोर वे ना बाँट दें । 

सत श्री अकाल । जय भारत  !

Ram Rahim bethe kaashi mein

राम और रहीम बैठे अयोध्या में पुछे सबकी जात,

तुम्हे किसने हिन्दु मुस्लाम बनाया, पुछे सब से ये हि बात, 

हमने सिर्फ़ इंसानियत का पाठ पढ़ाया , दुनिया में प्रेम से रहना सिखलाया ,

पर तुम इक दुसरे के खून के प्यासे हो चुके हो , एकता का पाठ जो पढ़ाया वह शायद भूल चुके हो

वह दोनों निकल पड़े बोले इक हि जुबान , इस मस्जिद मैं रहीम नहीं इस मन्दिर मैं ना है राम !!!

NaMo RaGa and Kejriwal please be aside. IPL 7 is about to begin

IPL 7 is commencing from Abu Dhabhi today. The year passed by is marred with many controversies from alleged arrest of three Rajasthani Royal players. Also media has put many questions on the kind of money spent in IPL. The whole concept of IPL is now under threat.

Well keeping everything aside, let us focus on IPL 7. Today it is between Kolkata Knight Riders and Mumbai Indians. Mumbai Indians are defending champions and would like to consolidate their position. On the other side, Kolkata Knight Riders would like to put up their best bet this season for win.

On papers, I personally feel that Kolkata Knight Riders has better chances to win today's contest. The top order though is a bit weak. Gambhir and Kallis are not the ones who can take you beyong 170-180 runs score. Only Uthappa possesses the fire. But I think that will easily be compensated by their middle order which has players like Yusuf Pathan who can accelerate the game, at will, especially during death. The bowling department, especially Spin attack is very good with the likes of Naraine, Piyush, Yusuf and M Morkel in the kitty.

Mumbai Team has strong top order with likes of M Hussey and Rohit Sharma. Though after them, there exists a void which is only filled by K. Pollard. The bowling attack is led by Malinga - the great stinger along with Ojha and Pollard. 

I feel that if Kolkata Knight Riders get the chance to bat first, it will be an advantage for them as they can easily choke a team through their restrictive bowling attack.

Whatever be the outcome, the great festival of cricket is about to begin!!! Mr. Modi, Mr. Gandhi and Mr. Kejriwal, please be aside for a moment. Give this festival a moment of glory it needs

Appeasement of Minorities - An Old Ritual before elections begin...

Yesterday all across the media, the topic was appeasement of minorities. The way all political parties are trying to appease minority, noticeably Muslim community before elections is testimony of the fact that they don't have permanent ideology. The ideology which can help them win the seats, these parties quickly adopt them.

Rajnath Singh's - BJP Party Chief statement yesterday in which he has apologized to Muslim community is a glaring example of the same. BJP's emergence at the national level was based on his hardcore Hindutva issue. Every citizen of the country knows that. Babri Masjid demolition was architect and executed by senior-most members of the party and many of them still exists in the ranks of the party. So, few quetions that come to anyone's mind is :

1) What was that he was apologizing for? Is he apologizing for Babri Masjid demolition?

2) Is he ready to forego Ram Mandir issue for the sake of minority appeasement?

3) Does he feel that Gujarat riots was the fault of BJP core brass in the state?

I feel that such statements by Rajnath Singh indicates the growing nervousness in the party ranks on isolating Minority base due to Modi hardcore Hindu image. Or it may have done to create confusion in Muslim community and an attempt to divide Muslim voter base.

Similarly, one may look at Samajwadi Party methods of Minority appeasement. He make sure he wears skull cap at every event which covers Muslim community but when it comes to protection of any religion community, his govt has terribly failed, both pre as well as post Muzzafnagar riots. As a state govt, it was his duty to protect every innocent citizen, irrespective of majority / minority community.

Congress is another big loud mouthed protector of Minority communities. The current Congress party is the biggest failure when it comes to implementation of its patriarch Mahatama Gandhi's dream of a secular India where all communities live together and thrive. The Congress policies in past two decades from Mandal Commission to other measures has created several divisions among the religions and castes across the country.

But it is sad for this land is that citizens of this country still believe in them and follow them. They have been fooled so many times and no hope till now exists which can actually get India rid of this menace.

Jai Hind!!!

How much credit that organizers get for Auto Expo 2014?

My Letter to Auto Expo Organizers

Dear Organizers,

You must be delighted to know that Auto Expo this year has got exceptionally well response from the car lovers of India. The response must have made you feel proud to be associated of being a part of this event. Though, one question which I would like to put in front of you is whether you deserve all the accolades as Organizers???

As organizers, your responsibility or your success parameters are how good people feel as they come and watch this grand event? Sadly though, most of the good memories that one is carrying is not about good management of the event but only cars which I saw in the event.

There were several major gaps in the overall management of this event, right from traffic jams due to improper planning for transport, too expensive food, unhygienic conditions around food stalls, dusty parking lanes and most of all, ticket booking!!! Why on the earth, I again need to go to Booking Counter, if I have already booked tickets online.

Well, let me share my experience as events unfolded.

Commuting / Transport

I came by my own car to visit Auto Expo on Saturday and reached Greater Noida in no less than 1 hours time from South Delhi (around 12 noon). 3 Kms before the event place, I encountered a huge jam which took me more than 1.5 hrs to cover. The reason for jam was the improper traffic management. As you take left from the express way, the parking was another 400-500 metres away crossing the entire venue. Making things worse, cars were illegally parked around the main road, congesting traffic lanes further, yet nobody bothered to prevent such thing at the first place or nobody to bring cranes and take out the illegal parking cars (though I have seen cranes moving around, but they were doing failed to enthuse after seeing those illegally parked cars).

Another example of improper planning was the bus stand which was before the car parking area. Thus, the buses which were bringing visitors had to stop to unboard passengers and again you see two left lanes permanently blocked, further hampering the vehicle movement. Anyways, phase-I of my event got over in 1.5 hrs as I reached the parking area.

Dusty Parking

As I reached Parking Area, I felt like I have come for a car rally!!!! The entire parking area was built on dry mud, which led to too much dust flowing in that area due to vehicle movement and windy conditions on Saturday. My wife, who is a bronchial patient, had a tough time crossing the parking lane. To your credit though, ample car parking space was available for such a huge public who was coming to Auto Expo.

Why I need to pick tickets again!!!

I booked my tickets for Auto Expo event through www.bookmyshow.com. As I have booked tickets online, why I am require picking tickets again? What is the benefit that you were providing to customers through online ticket booking? I feel that I have got “Zero” benefit from this process of yours. Anyways, I had to go to bookmyshow counters to get the tickets. It took me 1 hour to get the actual ticket!!!!!!! “Why I have to spend 1 hr. when I have already booked tickets???” Further things worse, the area was full of dust. Buses unboarding people on the road adjacent to counters increasing pollution and the entire family had to just stand in the open and face it for visiting Auto Expo. As organizers, you have the privilege of not going such ordeal and that is why you won’t understand the problems of standing in the open either under the full sun / rain waiting to get the tickets, WHICH YOU HAVE ALREADY BOOKED!!!! Anyways, this second phase got over in 1 hr.

Finally thanks to your management, it took me 2.5 hrs. to enter the Auto Expo, which otherwise should not be more than 15 mins. So at 2:30 in noon, I was finally inside the venue with my wife. Being a noon time, we thought of having lunch before we go inside the pavilions. And where starts the next ordeal!!!

So So Expensive Food and Dusty Environment

I can share pics, if you need of the swarm of people in and around eating area. Such was the fuss that people were sitting on the carpet and having food. No proper tables or sitting space was provided to the visitors, except 2-3 which were always occupied. And most importantly food prices!!!! Was prices of the food was made expensive intentionally as you were aware that visitors have no choice but buy food from those stalls only. How on the earth would you feel having a Thali for Rs. 500 and eating it in the open dusty environment and that too sitting on the carpet!!!

Atleast in Pragati Maidan, you have the options to go to nearby places like C.P / Pandara Road to have food. At Greater Noida, you are almost stuck!!! And hence, you have no other option but to buy food at extra ordinary prices… On an average, a person buying 300 Rs. Ticket has to spend equal amount on itself to fill its stomach and that too by sitting in open air space where dust is flowing and sitting on carpet!!!!!

Well, the remaining part of my visit was good. The pavilions were good. The show was really awesome and I had a good time inside the pavilions.

I, as a visitor, will most likely remembering the great cars which I saw in Auto Expo, but sorry to say, will also remember the quality of hospitality received from the event organizers… I feel that lot of changes are required in the management of such an event.

Do Google, find out some case studies and event models of great events organized in the past and try to take few ideas from those. Don’t just make such events a great money generating event. Nobody minds profitability, but not at the cost of customer dis-satisfaction, please always remember that…

Thanks

Mayank Jhanji

(E) – mayank.jhanji@gmail.com