indian insurance sector - issues and challenges
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8/6/2019 Indian Insurance Sector - Issues and Challenges
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Indian Insurance Sector -
Issues and ChallengesOpening up of the insurance sector will fostercompetition, innovation and product variations.
However, in this context one has to consider variousissues at stake.
These include demand for pension plan, separatenessof banking from insurance sector, role of IT, possibleuse of postal network for selling insurance products
And above all, the role of Insurance Regulatory Authority.
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After independence, the business of India Insurance
grew at a faster place ascompetition amongst the Indian
companies intensified. Thedecision of nationalization of lifeinsurance business took place in1956 when 245 India and foreign
insurance provident societies were first merged and then
nationalized. It paved the way towards the establishment of
Life Insurance was to raise themuch needed funds for rapid
industrialization and self-reliance in heavy industries.
eneral Insurance followed suitand 196 ¡ ; the Insurance Act was
amended to allow for socialcontrol over the generalinsurance business.
Subsequently in 197 ¢ , non-lifeinsurance business was
nationalized and the
eneralInsurance £
usiness(Nationalization) Act, 1972 was
promulgated.
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Insurance sector - Hurdles:
Insurance companies create products andgo out to find customers. They do not create
products that the market wants.
Insurance awareness among the generalpublic is low.
Term- Insurance Plants are notpromoted.
Unit -linked assurances are not available.
Insurance covers are expensive. Inefficientmanagement and low investment yield are
responsible for the high premium charged by Indian Insurance companies Investment
restrictions have been responsible for 10w yields.
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Returns fromInsurance Products
are low.
There is a dearth of innovative and buyer-friendly
insurance products.
Most agents anddevelopment officersare interested only in
producing new
business servicing.Existing customers
satisfactorily has not been a priority for
them
There is no marketresearch worth the
name andcomputerization is
woefully inade uate.
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Need of the Hour - Operational excellence
Process innovation:
� Further rationalization of core policy administration,underwriting and claims management processes to formµmega processes¶ across multiple products will enhance scale,
standardization and operational agility
Service innovation:
� Only insurance organizations with the foresight to capturecritical client data at multiple stages of the customer
interaction lifecycle and to leverage this knowledge will fully realize cross-sell and up-sell opportunities and improvedservice capability
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Technology innovation:
People factorsaside, regardless
of the sharedservices model
adopted by theinsurance org,innovation andsuccess within
technology environments will be supported by
focusing on 3critical elements:
A modularand
customizablepolicy
administration, ratings andclaims engine
A single
reporting and businessintelligence
enginestrategy
Taking asingle view of the
customer
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Trends and opportunities
Process innovation:
� Process innovation involves re-engineering key operationalprocedures to identify duplication, inefficiencies or synergies in theform of insurance mega processes. Recent market trends includeusing offshore service providers to complete commoditized, non- value-add operational tasks and processing.
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Service innovation
Service innovation focuses on bringing insurers closer to
customers to increase
penetration and retentionthrough cross-selling or up-
selling product lines andimproving satisfaction.
A modular and customizable policy administration, ratings and claims
solution
A single reporting and businessintelligence engine strategy
The all-important single customer view
Technology innovation:
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