Recently IRDA announced caps on the charges a insurance company can charge on its products. Earlier also, IRDA has been taking steps to ensure monitored functioning of insurance companies in India like they have been thinking about altering minimum lock in period of a insurance policy. But is it helping the consumer at ground? By putting a cap on the mortality or other charges, it can definitely provide some relief to the customer but the large issue still remains the same and that is, how a insurance policy is sold in India? Double of investment value in three years and many more other success stories which a insurance agent narrates to the customer while convincing. By increasing the lock in period, IRDA can put a check on this but definitely can’t stop this soon.
Most of the insurance companies only focus upon selling the policies and not upon maintaining them and provide customer satisfaction. This is the primary reason why they only focus upon increasing their new business premium and does not take enough initiatives to encourage customer to renew their policies and on the other hand as customer are not with the product, they are not interested in renewing that. Customers are not happy because its often that they misinformed about the product’s feature and end up buying something else assuming that they are purchasing something else.
Insurance companies generally focus upon increasing their sales forces to increase their business rather then enriching their existing agents. There are lots of efforts which go down from agent’s side before a policy is being sold because of a lot hit and conversion rate. Despite getting high commission rates on polices, agents are generally not sure about their future income and that is one of the reason they opt for malpractices.
Insurance companies should develop a commission structure which ensures consistent future income for the agents along with engaging them in better ways so that they can relate themselves with the company and provide better services to the customer rather than just trying to extract customers. Human resources practices are the biggest challenges which Indian companies face across the sectors and spectrum of the professionals. But in insurance industry, it does have a direct impact over the services which they offer to customers and in turn to the company.
Now there are many insurance companies which are thinking to go public. It will ensure a lot of information disclosures to the public but again, it depends upon how SEBI or IRDA look into this matter? There are various kind of information which can be disclosed to the investors. So, if SEBI or IRDA makes it mandatory for insurance companies to disclose their lapsation rates along with other information, it will be better for investor to look into the long term health of the company.
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