Finance Minister P Chidambaram on Monday asked state-run insurers to increase their market share and stressed the need to enhance insurance penetration to attain global levels in a reasonable time frame.
In a review meeting with the heads of public sector insurance companies, he asked them to ensure no further market share was lost and the current level of 53 per cent was maintained and steadily improved upon.
Public sector general insurance companies recorded growth of 10 per cent in gross premium during 2013-14 and projected 100 per cent growth in the next five years. Though their profitability improved during the year, they saw a marginal decline in their market share during 2013-14.
LIC showed a growth of close to 18 per cent in first year premium income during 2013-14, against 11.57 per cent growth of the life insurance industry as a whole. It also increased its market share in terms of first year premium from 71.36 per cent to 75.33 per cent in 2013-14. The market share in the number of new policies sold also went up during the period by 1.2 per cent to 84.44 per cent.
“It was noted the persistence of life insurance policies during 2012-13 has improved for the initial post-subscription years but it remains a challenge to maintain this in the later years of the policy,” the finance ministry said in a statement.
Chidambaram stressed the need to study the persistence for ULIP and non-ULIP policies separately, to pointedly undertake focused efforts for each category.
On insurance penetration he was told that public sector insurance companies had ensured access in virtually all towns (barring 10) with a population of 10,000 and above, with LIC opening 1,261 micro offices and public sector general insurance companies opening 1,849 micro offices in 2013-14.
Settlement of motor third party claims through Lok Adalats was identified as a major focus area in the 2013-14 Budget. It was noted that a settlement ratio of 50 per cent of cases referred was achieved through the conduct of regular and mega Lok Adalats.
Chidambaram advised the conduct of Lok Adalats in coordination with state legal service authorities to increase the settlement ratio further and decrease the backlog. He suggested Irda might examine the issue of suitably implementing through its regulatory powers the stipulation of mandatory motor third party insurance and also review the premium rates so as to reduce the burden on insurers.
“A decision on the proposal for a three-year policy for motor vehicle insurance under consideration of Irda may be expedited to reduce instances of uninsured vehicles,” the statement said.