Lack of Awareness and High Incidence of frauds Impacting Indian Insurance Sector: PHD Chamber

Lack of Awareness and High Incidence of frauds Impacting Indian Insurance Sector: PHD Chamber

Lack of Awareness and High Incidence of frauds Impacting Indian Insurance Sector: PHD Chamber

 

No.PR-87
September 14, 2016
New Delhi
 

Lack of Awareness and High Incidence of frauds Impacting Indian Insurance Sector: PHD Chamber
 

According to a survey conducted by PHD Research Bureau, around 49% of the population is not well aware and familiar with insurance products in India due to lack of information and awareness about insurance products.
 

According to the survey, life insurance has been used more for investment and tax saving purposes in people’s overall financial planning. Despite this, 56% of the survey population has not availed any kind of insurance policy/products due to poor advice, wrong information and lack of understanding of the product, said the survey study.
 

In India, Insurance companies are most affected by misspelling due to premeditated fabrication and fraudulent misrepresentation of material information. Also, insurance continues to be missold with senior citizens being the softest targets as they do not understand new products, said the survey
 

In non-life insurance in India, the Motor insurance continues to be the largest segment with a share of 44.14 per cent, the share of health segment being 26.73 percent and the remaining share contributes to Fire and Marine segments respectively.
 

Further, the survey has revealed that 50.50% of people consider the premium offered by the company as an important factor while purchasing insurance policy, 24.60% considered company’s credibility, 15.26 % considered past records and 5.86% considered consumer base of the company as an important decision factor.
 

According to survey findings, 33% of the people find insurance products too complicated and technical while 24.68% find it difficult to understand the product. Hence, 74% respondents believe personal interaction is very important before buying insurance products.
 

The survey also revealed that 34% of respondents have chosen family, friends or word of mouth as the information sources for buying insurance products, 3% opted for direct contact with bank or company people, 20.22% opted for newspapers and magazines, 8.07% for television, 7.30% as internet and 19% said advice from intermediary agent as information sources for buying insurance products.
 

The survey revealed that 20.32% of respondents considered increase in income, 46.02% considered better features of the product, 21.30% said discount in appreciation for their continued business and 11.16% considered more personal contact with their provider as the factor that would persuade customers to stay.
 

Overall, roughly, 16.72 % of respondents are satisfied with the services being provided to them, 30.66% wants to improved administrative issues, 33.42% of respondents said response time and correspondence needs to be improved and 19.20% mentioned about delays in settlement and under payments.
 

India's insurance sector is the biggest in the world with about 1,442 lakh policies and the insurance market is expected to quadruple in size over the next 10 years from its current size of US$ 70 billion, said the PHD Chamber survey.
 

In Insurance business, India is ranked 11 among the 88 countries with a market share of around 2 percent in global life insurance market.
 

India stands 15th globally with respect to premium income. In terms of insurance density in India, it increased from $11.5 in 2001 to $55 in the recent years.
 

The major challenges facing Insurance sector in India today are low insurance awareness among the masses and increased incidence of frauds in the Insurance business. Recent trend, including heightened consumer expectations, new market entrants and significant demographic shifts have created an important window of opportunity for Insurance Companies to act now, said Dr. Mahesh Gupta, President, PHD Chamber of Commerce and Industry.
 

Also, the insurance industry is a major component of the economy by virtue of the amount of premiums it collects, the scale of its investment, its contribution to employment generation, infrastructure development and, the essential social and economic role it plays by covering personal and business risks,  said Dr. Gupta.
 

keeping into consideration India’s demographic factors such as growing middle class and young population, it is the need of the hour to propagate awareness generation through mass media and on-ground interventions to tap the vast potential of the Indian Insurance sector, said Dr. Mahesh Gupta.
 

Full report attached
 

***********
 

Ends.

Koteshwar Prasad Dobhal
Consultant (PR)