Need to simplify insurance products: Official

MUMBAI - The insurance regulator Tuesday said companies should simplify the complex legal language used for insurance policies, which was proving a deterrent to growth of the industry.

“If we make products simpler and make it easier to understand, it will automatically increase penetration,” said J. Hari Narayan, chairman, Insurance Regulator and Development Authority (IRDA), addressing a industry summit organised by CII.

According to Narayan, the focus of the industry watchdog was to test all the products for fairness and robustness.

“Any product will be tested against the concept of fairness and robustness and only then will they be permitted into the market,” he said.

He also highlighted that the regulator’s role is also to see how to widen and enable the insurance market in the country.

Agreeing with Narayan’s views, T.S. Vijayan, chairman, Life Insurance Corporation (LIC), said that the industry had tremendous potential to grow by providing micro-insurance to more than two third of Indians living in rural areas.

“More than 70 percent Indians are uninsured and since more than two third of India lives in rural areas, there’s a need for micro insurance to reach them,” said Vijayan.

The private sector was allowed to participate in the insurance industry in 2000 which has substantially grown, and is estimated to to reach $1 trillion by 2030.

Currently there are 23 companies in life insurance and 24 in non-life insurance segment, compared to four in life and eight in non-life insurance in 2000.