'Detariffing to impact on financial services'

Mumbai, Oct 9: Detariffing, which is likely to kick off from the beginning of next year, is all set to have its greater impact on the insurance sector, said the chairman of Insurance Regulatory Development Authority (IRDA), C S Rao, here today.

Inaugurating CII's 10th Insurance Summit-'The Road Ahead', he said that once come into force, the detarrification of the insurance sector in the country was likely to have a greater impact on the financial services being provided by various financial institutions of the country. Now the customers will put pressure on the banks and other financial institutions to provide services in more competent way, he added.

Hence Mr Rao asked the insurers to focus their attention on catering the individual needs of the insured which was likely to emerge in a big way once the road for the detariffication was opened.

''Time was when the personal life business used to contribute a small fraction of 10 per cent of total premium collections.

However, it had reached the figure of 16 per cent last year. Still I hope it will go further in days to come,''said Mr Rao.

Later talking to sources on the sidelines of the function, he said that the detariffication will open new vistas for the long-awaited customization of the insurance products. For starters, it means that the insured can directly ask the fund managers of the insurance companies to change the insurance products taken by him from one scheme to the other.

Though ULIPs (Unit LInked Insurance Policy) are there to cater to such requirements of the customers upto certain extent in an indirect way, the detarrification is expected to open whole lot of choices before them, he added.

Expressing his happiness over completion of five years when the insurance sector was thrown open to the private sector, Mr Rao said that from contributing merely 1.29 per cent of the GDP until five years ago to 2.5 per cent now, the insurance sector has come a long way. Still, he said that the figure should reach five within next few years as it was already prevailing in some of the smaller Asian nations like Malaysia.

Giving another instance, he said that the collection of first year's premium of the year 2005-06 which was nearly Rs 40,000 crore, was far more than that of the mark achieved in 2000-01, when the sector was opened for the private sector.

He hinted that a large number of new insurancve products are likely to hit the market in near future. Also, he urged the educational institutions to come forward in the introduction of more and more insurance related courses like actuarial science, fund management, underwriting and others so as to bridge the gap of a short of vacuum which was being observed in the industry thanks to the lack of trained and qualified staff.

UNI