|
Home / Life
/ Articles
Are private insurance companies reliable?
Enter private insurers with an altogether new agency force, all
ready to hawk freshly designed insurance policies. And the market
scene - a government owned established insurance entity -the Life
Insurance Corporation (LIC) with a field force of over 6,00,000
agents and more than 80 products to choose from.
Its almost a year since private insurers began their operations.
In a scenario where LIC called the shots all these years, how
far have private insurers been able to make inroads after almost
a year since the opening of the sector. And are their sales force
(called life advisors or insurance consultants) successful in
pushing their products inspite of the security factor -the ‘government
guarantee’ label attached to LIC products - Insuremagic makes
an attempt to find out.
To an audience who spelled insurance as LIC, the initial breaking-through
by private insurers was not an easy task. Being in the insurance
business for about 50 years, LIC had already carved a name for
itself in the Indian psyche. Insurance being a long term contract,
an established name means a feeling of security and more importantly
LIC policies come with the safety tag - the most touted government
guarantee. So how easy is it to break the mold.
Says a private insurer’ spokesman “Initial apprehensions are
bound to be. But slowly times are changing. People are open to
tailor-made products ” Most of the individuals approached by private
insurers were existing LIC customers. But ask them what made them
buy insurance and the reply is ‘for tax purposes’. The need for
insuring ones life after evaluating the growing requirements over
a period of time was never felt.
Blame it on the lack of information available then or the agents
who were more keen on higher commissions than educating prospects.
Which is why not much thought was given to choosing the right
risk cover. “Today it is observed that either most of the prospects
we have approached are underinsured or the risk covers bought
by them do not suit their needs” says an insurance advisor.
While it is difficult to match the number of products LIC has,
private insurers have come up with products that allow mix n match
and combinations that can be worked out to suit individual requirements.
Sadly LIC products allowed little flexibility. But today with
the concept of riders catching up LIC has decided to offer term
assurance rider to those taking the revised Jeevan Dhara product.
Competition, no doubt is getting rife. Private insurers are
concentrating on need based selling. “Instead of pushing policies
down the throat we educate the customer and offer guidance on
how much insurance the individual needs, an approach that is slowly
paying off,” says an insurance advisor.
Consider the fall in returns on almost every investment avenue
today. Comparatively insurance as an investment offers a lot more
in terms of returns, risk cover as also the tax concessions and
added bonuses. But look at LIC products offlate - the returns
on a number of policies have been revised downwards. So where
is the concept of guaranteed returns? ” asks an insurance consultant
of a well known private insurer.
Private insurers are playing it safe - not assuring any guaranteed
returns. But how economically are the new wares priced? “Price
wise the difference in products is marginal. Buying riders may
mean paying a little extra but check out the benefits offered
and its more than worth the price” says an insurance advisor.
Talk of providing customer service - an hitherto neglected area,
and private insurers realized it is an area they could score over
the behemoth easily. LIC with the entry of private insurers flagged
off a mass computerization drive that would connect each of its
branches across the country to facilitate among others premium
payments online.
Considering the reputation LIC has built over a period of time
attached with the most saleable tag of government guarantee, and
the deep- rooted loyalty reposed in it is comprehensible which
manifests in its policy sales.
‘Private insurers have been able to make a dent in the market
in the first year of their operations garnering a market share
of a mere 0.02 per cent of the Rs 36,070.4 crore market says an
LIC agent. And four private life insurers together have sold 10,000
insurance policies during the first year. Comparatively LIC issued
two crore risk covers during the said period inspite of the entry
of private insurers, including 3.45 lakh new annuity policies’
says the LIC agent proudly.
For private insurers the first year has been well begun. The
insurance sector claimed more newsprint than any other and with
tailor made policies, riders/add-ons, publicity campaigns etc
the interest has caught up considerably. The awareness building
exercise undertaken by private insurers has paid off. But will
they honour the promises made by them in the long run is a pertinent
question in several minds which only time will say.
More Life Articles
Other Categories
| Back
| Top | Home
|
|
