Cover cos fail to insure lower sections of society, feels govt

MUMBAI: The government has expressed unhappiness over the fact that insurance companies have failed to provide cover to lower sections of society. The failure is highlighted by the fact that every year catastrophes result in economic losses running into crores, but there are hardly any insurance claims.

This was indicated by Tarun Bajaj, joint secretary, department of financial services, ministry of finance, while speaking at a CII seminar on insurance.

���We have seen an increase in weather related natural calamaties as a result of global warming. We have seen floods in states such as Bihar and other parts of the country. But, when I check with the insurance companies I find that they hardly have any exposure,��� said Mr Bajaj.

Mr Bajaj said he strongly felt that microinsurance should take priority over microfinance. ���Microfinance will not be complete without microinsurance as one event is enough to push back an aspiring farmer into his original state,��� said Mr Bajaj. He added that insurance companies should use the microfinance institutions to deliver microinsurance and come out with low value combo-products, which would allow the customer to deal with one entity.

Speaking at the event, Bimalendu Chakrabarti, chairman, New India Assurance said non-life companies need to be given more flexibility by the regulator to design their own products. He said that the process of liberalisation remained incomplete without the freedom to draft covers on their own.

���Detarrification was the requirement of the industry because it was necessary to have the market to control pricing. We now need more flexibility on the wording terms and contitions to ensure that there is much wider variety within the same segment.���

According to Sandeep Bakhshi, MD, ICICI Lombard General Insurance, there needs to be cooperation between the government and the companies to increase the penetration for microinsurance.

One of the targets is to grow above 1% in next three years.