Press Esc to close
Saturday 04 July 2015
News updated at 3:34 PM IST
Weather
Max: 33°C
Min : 21°C
In Bengaluru
Rain lightly

FM asks insurance companies not to mis-sell products

NEW DELHI, Feb 4, 2013, DHNS:

Blames it for low insurance penetration

Union Finance Minister P Chidambaram addressing a press conference in New Delhi on Monday. PTI Photo

Concerned over the slow growth of insurance sector in India and its dismal penetration, Finance Minister P Chidambaram Monday told insurance companies to stop “mis-selling” and resort to sale of simple products to capture the vast Indian market.

Mis-selling is the practice of a salesperson misrepresenting or misleading an investor about the characteristics of a product or service.

 Many an unsuspecting customers have fallen prey to the practice of mis-selling by the insurance salespersons followed by delay in settlement claims. This is the sole reason, insurance penetration in India has been very low despite the sector was opened up for private players a decade ago.

“If you want to sell insurance in India, you must sell simple products and not mis-sell,” Chidambaram said, adding India’s savings, which currently was at 30 per cent of the gross domestic product, can be diverted to insurance sector only if people had enough faith in the product sold.

 “Indians have a penchant for saving. In fact savings are the lifeline of Indian economy. but people will save in insurance and cover themselves against risk only if you sell them simple product, which they can understand and they donot feel that they are cheated by mis-sell, the finance minister said at the launch of a new brand of PNB Metlife following Punjab National Bank’s acquisition of a 30 per cent stake in the company..

Life insurance penetration in India is about 4.4 per cent of the GDP in terms of total premiums underwritten each year. That compares with 8 per cent in Japan and 9.5 percent in Britain. But, the general insurance penetration is a miniscule 0.7 per cent. This is far below the international bench marks and a vast  geography in the country is still untapped.

The minister also expressed concern over life insurance penetration coming down in the past couple of years.

Life insurance penetration in India was higher than the world's average in 2010 and the combined average is higher than Brazil and Russia and most of other countries of Asia including Bangladesh, Pakistan, China and Sri Lanka.

 “I think we should ask ourselves why in a country where demand for banking services is there, but no adequate demand for insurance,” Chidambaram said.


Go to Top

Photo Gallery
India and Bangladesh basketball players in action during the 4th South Asian Basketball...

India and Bangladesh basketball players in action during the 4th South Asian Basketball...

A farmer works in a paddy field at Reba Maheswar village, 56 kilometers (35 miles) east of Gauhati..

A farmer works in a paddy field at Reba Maheswar village, 56 kilometers (35 miles) east of Gauhati..

A tiger attacking spotted deers at Nagarahole National Park in Mysore district on Friday...

A tiger attacking spotted deers at Nagarahole National Park in Mysore district on Friday...

Monsoon rain clouds hover over the backdrop of Kitthur Rani Chennamma statue near Town Hall...

Monsoon rain clouds hover over the backdrop of Kitthur Rani Chennamma statue near Town Hall...

Protesters run for cover after police fired teargas shell to disperse them during a clash...

Protesters run for cover after police fired teargas shell to disperse them during a clash...

A gust of wind bends the umbrella of a street vendor crossing the road during a heavy downpour...

A gust of wind bends the umbrella of a street vendor crossing the road during a heavy downpour...

Indian Muslims offer prayers during Ramadan at the Vasi Ullah mosque in Allahabad...

Indian Muslims offer prayers during Ramadan at the Vasi Ullah mosque in Allahabad...

Buddhist monks from Thailand offer special prayers for making a new Temple...

Buddhist monks from Thailand offer special prayers for making a new Temple...

A worker drying up vermicelli at a factory in Allahabad on Friday during Ramadan...

A worker drying up vermicelli at a factory in Allahabad on Friday during Ramadan...

Bollywood actors Amit Sadh, Aditi Rao Hydari and Arshad Warsi at the launch of a new multiplex...

Bollywood actors Amit Sadh, Aditi Rao Hydari and Arshad Warsi at the launch of a new multiplex...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523