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An open letter to Arun Jaitley - Focus on Insurance Industry it has great potential

When the economy slowed down (2011 onwards) and GDP was going down, he realized his mistake in the year 2013 and decided to take keen interest in this industry.

 
 
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PRLog - Jun. 14, 2014 - EAST OF KAILASH, India -- Hon’ble Minister

Congrats. This is a short letter to you so that you can achieve a lot for the country and its people by focusing on Insurance Industry. For most of the tenure of your predecessor this industry was treated as a too small industry to have his time and attention .This thinking was acceptable to him when the GDP was at a good level. When the economy slowed down (2011 onwards) and GDP was going down, he realized his mistake in the year 2013 and decided to take keen interest in this industry. During last year (February onwards in 2013 reference budget speech) he paid some attention to Insurance Industry but 1 year is too short a time to achieve something and to correct the path or give acceleration to an industry which had been on braking mode for last many years.

Some of the suggestions to you are:

1. Agent Force: Licences of 15 lakh Life   Insurance agents were cancelled in the recent years as a result of this these agents stopped getting even the commission which they were getting on renewal premium. These persons started making negative propaganda in the market and talking against the industry. You can well imagine what havoc can be caused when 15 lakh families are talking negative about something. Let us bring them (15 lakh agents) back into work force by retraining them .You  will appreciate that it is easier to retrain someone than getting a new agent and training him from scratch.

2.Number of Insurance Companies ; Over 14 years 50 insurance Companies have been added which means on an average 3.50 ( three and a half) insurance companies have been added on yearly basis. This includes Life/Nonlife /Health Insurance companies. If we look at them individually then for Life Insurance Companies this figure is 1.70 companies per year for this large country with population of 125 crores. Recently when RBI invited application s for banking Licence then 26 applications were received or we can say 26 companies lined up in the queue for getting licence. Separate teams were set up in the business houses for making decision to apply for licence. There was activity all over. Even the consulting firms set up special task force and they were meeting the business houses and guiding them on “Why they should apply for Banking Licence?”In the recent years (say 5 years) the number of licences issued to the insurance Companies have come down significantly or we can say have reached to  trickle level  2 licences in a year  and that too for a large country of ours  is nothing .I am not repeating this point in many words .

You should consider a special campaign by either advertising  or issuing notification that 45 Licences for Insurance Companies will be issued (Life 15, Non Life 15 & Health 15) in a time bound manner (subject to scrutiny as per Regulator Guidelines). Applications are to be submitted in 90 days. Processing will be completed (issue of licence or rejection of application) within 90 days of closing of application. You will be impressed with the response and results .Let us give a push to this industry which has the potential to generate 50 lakh jobs (direct/indirect) by employing the young persons coming

3.Special focus on Distribution of Insurance Companies in various states ; In 14 years not even a single insurance company has been licenced in the following states : Punjab,HP. MP.Jharkhand,Chattisgarh,Bihar, Odhisa,Assam .Maghalya ,Kerala, other North East States etc.  You are aware that registered office of the company in the state results in Income Tax return being filed in the state .This also results in generation of jobs in the state, results in economic distribution, development of products suitable for the people of the state. All the Mumbai based insurance Companies have been forcing same products on people of Punjab or North East States. Let the Punjab based Insurance Company think in terms of need of Punjab customers  ,let them think as people of Punjab think .A Punjab based company having branches in every   Tehsil will be having much   better service level and brand loyalty . Service by a Mumbai based company from 2 major towns of Punjab is not conducive to the growth of Insurance penetration.

4. Human Resource; This industry has been dependent on persons who studied any subject. Seeing the growth potential of this industry it is time we introduce Insurance as a vocational subject in class10&12. This can also be introduced as a subject in undergrad courses. Those who have studied this subject in school /college should be given preference in becoming Insurance agent or joining insurance brokerage firms or insurance companies. You will appreciate what amount of money has been wasted in last 14 years by training students of Political Science & Philosophy to become employees /agents   of Insurance Companies.

There was time when in India we set up IIT’s, AIIMS, IIM’s IIIT’s (Information Technology). Under your leadership and with support of Ms Smriti Irani (HR Minister) now the time has come for setting up of Indian Institute of Insurance (III).We can make the beginning with 6 III. You can include this decision in your July budget. Training Centers of LIC/New India/Oriental/United / National can give logistic facilities towards start of these Institutes of National Importance so that these Institutes can be operational from Jan 1, 2015. Those coming out of these III‘s will be committed to Insurance as a career. Let us not forget Insurance is an Industry with long term perspective and we need trained manpower that is having long term commitment towards   growth of this industry. We have wasted lot of money in getting dissatisfied / unsuccessful managers from banking industry in to Insurance Industry. After wasting 18 months in learning Insurance they have been going back to banking. Under the head of training what money has been wasted by 50 insurance Companies during 2001 to 2014?

Insurance industry has the potential to:

1. Create 50 Lakhs jobs for youngsters of this country

2 To invest Rs 50 Lakhs Crores in stock market

3 To contribute towards Infrastructure Projects, which have long gestation period? Insurance money is long term money and can build the nation. It is much better than FII money which can come in 2014 but go out at a short notice.

I do hope you will take up the matter with Minister HRD and make suitable announcements in the coming days as well as budget speech.


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Source:Insurance Foundation of India
City/Town:East of Kailash - Delhi - India
Industry:Finance, Insurance
Tags:Insurance Industry India, insurance industry, insurance in india, Scope in Insurance, Insurance Portfolio India
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