FM asks IRDA to increase insurance density

NEW DELHI: Finance minister P Chidambaram on Friday urged the insurance regulator to focus more on its developmental role to increase the insurance penetration in the country, which is well below its need and potential.

“For the first time we have a former insurer as the head of IRDA and you have a mandate to develop the insurance industry. While regulations are important, development of the industry is equally important,” he said referring to TS Vijayan, the new chief of Insurance Regulatory and Development Authority (IRDA).

Vijayan is the former chairman of the country’s largest insurer, Life Insurance Corporation of India.

Chidambaram was speaking at the launch of an IRDA-backed insurance awareness campaign by the General Insurance Council. He said India ranks 52nd in nonlife insurance penetration, which is lower than countries such as Sri Lanka and Malaysia.

“We have 27 general insurance companies in the country, yet the general insurance penetration is 0.71%,” he said, adding that by every measure there is a long way to go. The insurance density for general insurance in India is less than $9, while it is $53 in China. Gross underwritten premium (GWP) of the sector was Rs 69,000 crore in 2012-13.

The finance minister stressed that the campaign should not remain limited to metros like Delhi and Mumbai but should reach the states such as Bihar, Chhattisgarh, Uttar Pradesh and Uttarakhand, where insurance penetration and awareness is low.

“This campaign must go to other capitals, this campaign must go to second-tier towns,” he said.

Vijayan said that IRDA is likely to finalise a report by next week on allegations of money-laundering by three life insurance companies – HDFC Life, ICICI Prudential Life and Max Life – following an expose by Cobrapost. com. “We have got some response, but we on our own are checking that. I have not seen the report. Next week the report should come,” he said.

Last month, the insurance regulator had sought explanations from CEOs of these three life insurance companies.
Gear up for LPG subsidy rollout, FM tells banks

P Chidambaram on Friday told bankers to be ready for LPG subsidy rollout for the whole country. The government has decided to give cash subsidy to LPG consumers under its ambitious Direct Benefit Transfer scheme soon. A pilot will start in 20 districts by May 15.

There are about 14 crore LPG consumers in the country. Regarding the second phase of DBT scheme to be launched from July in 78 districts, Chidambaram said: "They (bankers) have all said that they will be ready in the 78 districts". - Our Bureau