Wednesday, November 23, 2011

Irda’s strategy to advertise insurance coverage items as a result of post offices hits barrier

Dear Comrades,

The life insurance coverage wing of India’s postal service has objected towards the insurance coverage regulator’s move to let post offices to vend the policies of other insurers.

India Post’s life insurance coverage section says due to the fact the postal department has its personal life cover schemes, it ought to not sell the policies of other insurers.

“We have the biggest network on which other insurance coverage firms would like to ride,” an official in the directorate on the postal life insurance coverage (PLI) mentioned on predicament of inscrutability. “We have our very own insurance coverage scheme. Then why must we sell policies of other insurance coverage providers and shed our benefit?”

The Insurance coverage Regulatory and Improvement Authority (Irda) in October permitted every postal area of India Post to function as an insurance coverage agent. Every such circle was permitted to sell policies of two basic insurance coverage firms, two life insurers, a single agricultural insurance coverage organization and 1 stand-alone well being insurer.

Some private insurance coverage firms have identified it hard to expand their distribution networks. The regulator’s move to have post offices act as agents would have worked inside the greater interests of economic inclusion, as outlined by Irda.

To become positive, because promoting economic items is usually a superior method to produce revenue, the postal department is reluctant to let go of this income-earning segment in spite of objections from its insurance coverage wing.

It had been India Post that had asked for such an arrangement, mentioned an Irda official. “Earlier, they had been permitted to sell policies of only one particular insurance coverage organization,” he mentioned, requesting anonymity. “We permitted every single circle to sell policies of two life and common insurers and 1 well being insurer.”

Postal life insurance coverage, at first meant for postal staff, was later extended to other government workers. In 1995, it had been extended to rural locations.

There had been a lot more than four.four million postal life insurance coverage policies and 9.9 million rural postal life insurance coverage policies as on 31 March 2010, official information present.

Irda gave India Post a distinctive allowance right after an professional committee headed by Ajay Shah recommended properly using the postal network to additional economic inclusion.

The insurance coverage regulator needed to leverage the attain of India Post to deepen the coverage of insurance coverage solutions within the nation. When the penetration degree of common insurers is as low as 0.6% on the gross domestic item, incursion of life insurers is slightly above 4%.

India Post features a network of above 155,000 branches across 22 circles. Far more than 45% of its earnings comes from numerous economic companies. As of December 2009, India Post’s complete income was Rs.two,273.69 crore.

“Selling insurance coverage policies is usually a very good income stream for the postal department. Because it is, the PLI scheme will not cover every one of the needs with the population,” stated an insurance coverage organization official, who declined to become named.

Private insurers say in the event the India Post experiment was prosperous, Irda might also authorize banks to sell policies of much more than 1 firm.

“I believe Irda has test-piloted by opening it out for India Post,” mentioned an additional insurance coverage organization official, requesting anonymity. “The regulator desires to see what the teething challenges are and also the bottlenecks in advance of permitting an open architecture.”

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