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Interview of Sandeep Batra,
Chief Financial Officer,
ICICI Pru Life Insurance Company
(Date: 21 June 2005)
The news about the exit of AMP Sanmar from life
insurance has created a stir. Policyholders who have bought
insurance from private insurers are worried today? Your
comments.
The IRDA has stringent guidelines governing the credentials
of the companies that enter the industry, their functioning
and their management. It is only after thorough checks to
ensure that they have met the required norms have the private
players been issued licenses to operate.
Private players must also bring in fresh capital to meet
the solvency norms, and this ensures that policyholders’
interests are protected. Hence, there is no reason for the
policyholders to be worried.
In fact, in the five years since liberalisation, the private
sector has made excellent progress - its share has grown
to 11% of the total industry in FY05, which is reflective
of the growing public confidence in private players. This
growth can be attributed to the efforts of private companies
in brand building, increasing customer awareness and most
of all, training advisors to impart need-based and professional
selling advice.
As happens in all sectors, companies sometimes revise their
strategies and priorities, as has happened with AMP Sanmar.
Such developments could possibly happen in the future too
and should not be viewed with great alarm. It is important
to understand that AMP Sanmar is merely exiting the market;
it has not collapsed. In fact, in such cases, the policyholders
usually benefit because the company is bought over by another,
stronger player who will be able to offer the policyholders
even greater benefits.
As per sources many foreign insurers who are eager
to set up shop here are talking to AMP. What is the future
of the Indian life insurance industry?
The future of the Indian life insurance industry remains
very bright. The potential for life insurance in the country
is immense and there is room for several companies in the
country.
It is always the customer is the ultimate beneficiary of
the competition that arises from such developments and hence
customers can look forward to even more developments in
their favour over the coming years.
In light of the above instance, what are the factors
one should consider before choosing a life insurance product?
The factors that should be considered when buying
a life insurance policy remain the same. The type of policy
one purchases should be determined after conducting a thorough
personal finance review, which takes into account one’s
current lifestage and future financial goals.
So, while a pure protection policy might be suitable for
one who has investments in several other channels, an endowment
or market-linked policy is ideal for one who seeks to invest
over a period of time to purchase an asset later.
The important thing is to look for and completely understand
the nuances, especially regarding flexibility and liquidity,
which can considerably alter the way the product works for
you.
When selecting a life insurer, below are some of the broad
factors to be considered:
- Whether the company provides customized solutions to
cater to your specific needs.
- If the company provides personal financial planning
or risk-advisory services to make sure you get the most
comprehensive and cost-effective policy.
- The pedigree of the insurer - this reflects on their
management and investment skills and directly impacts
the returns.
- Are they easily accessible? Will your policy be serviced
well, particularly in time of need?
- Last, but not least, invest in a brand you trust to
manage your money well over the long-term.
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