Premium rates to decline in insurance market: FICCI

New Delhi, Jan 3: Industry body Ficci has predicted a rapid decline in the premium rates of insurance market with detariff, free-pricing policy coming into effect from January 1.

In a nation wide survey conducted by the chamber, almost 80 per cent of the respondents said market will need 2-3 year to stabilise, 92 per cent prefer to deal with insurance companies directly and 60 per cent opt for companies for expert advice, rather than insurance brokers.

The survey also revealed that brokers as intermediaries are still not wholly acceptable for the corporate or individual clients in India.

This fact has been noted by the Insurance Regulatory Authority of India (IRDA) which is framing new guidelines for brokers.

Unhealthy competition in the market has also affected the professional image of brokers.

Post-free pricing, markets would need expert advisory services which can be provided by the brokers, however, 60 per cent of respondents said they would like to deal with the insurance company directly rather than dealing with the brokers and only 40 per cent preferred to deal with brokers for expert advice post-free pricing.

There is a special discount given by the insurance company to brokers on the business procured by them. When the consumers decide to deal directly with the insurance company rather than the broker, 52 per cent of the respondents were in the favour of not continuing the special discount. More than the discount, there are other factors which are considered important by the consumers.

The survey findings show that on an average more than 92 per cent were quite aware of the incoming free pricing regime and 51.3 per cent had awareness on the products that would move under the free pricing regime.

Since the opening up of the insurance sector several private players including foreign players have entered insurance business in India. In totality, India has about 16 players in life and 15 in general insurance sector.

To a question on whether need to have more competition in terms of number of insurers, 88 per cent answered in negative.

They felt there were adequate number of insurers operating in the market. Only 12 per cent felt the need for more competition in this sector.

UNI