• PRIVATIZATION OF INSURANCE SECTOR
BANKING AND INSURANCE
PRINCIPLES OF INSURANCE
BANKING AND INSURANCE
•
•
INTRODUCTION
1. INSURANCE HAS
ALWAYS BEEN A POLITICALLY SENSITIVE SUBJECT IN INDIA. WITH IN LESS THAN 10 YEARS
OF INDEPENDENCE THE INDIAN GOVERNMENT NATIONALIZED PRIVATE INSURANCE COMPANIES
IN 1956 TO BRING THIS TO RAISE MUCH NEEDED FUNDS FOR DEVELOPMENT ACTIVITIES.
2. PUBLIC SECTOR
ENTERPRISE CAN NOT PERFORM THE BUSINESS ACTIVITIES EFFECTIVELY AND EFFICIENTLY
IN ANY COUNTRY. THE TOTAL NATIONALIZATION OF THE BUSINESS INDUSTRY WILL LEAD TO
ANARCHISM.
3. IN INDIA
THERE IS MIXED ECONOMY. TOO MUCH EXPECTATION FROM PUBLIC ENTERPRISES WILL
DISTORT THE ECONOMY AND WILL ULTIMATELY LEAD TOWARDS WASTAGE OF PRECIOUS AND
VALUABLE SCARCE RESOURCES,
4. THE
PRIVATISATION MAY BE DONE AFTER ANALYZING THE EFFICIENCY OF THE ORGANIZATION
AND THEIR ROLE IN THE ECONOMY.
•
PRIVATISATION OF INSURANCE INDUSTRY IN INDIA
1. THE
GOVERNMENT OF INDIA 1993 HAD SET UP A HIGH POWERED COMMITTEE UNDER THE CHAIRMANSHIP
OF R.N MALHOTRA,FORMER GOVERNOR OF RBI TO EXAMINE THE STRUCTURE OF THE
INSURANCE INDUSTRY.
2. TO ASSESS THE STRENGTH AND WEAKNESS OF INSURANCE SECTOR
3. TO MAKE
RECOMMENDATION FOR CHANGING THE STRUCTURE OF INSURANCE SECTOR
4. SPECIFIC
SUGGESTIONS TO IMPROVE LIC AND GIC
5. TO MAKE
RECOMMENDATION ON REGULATION AND SUPERVISION OF INSURANCE INDUSTRY
•
RECOMMENDATION OF COMMITTEE
•
SUGGESTED PRIVATE INSURER CO EXIST ALONG WITH
THE GOVERNMENT COMPANIES
1. RAISING THE
CAPITAL BASE OF LIC AND GIC UP TO RS 200 CRORE HALF BY GOVT AND HALF SOLD TO
THE PUBLIC AT LARGE WITH SUITABLE RESERVATION FOR EMPLOYEES
2. PRIVATE
SECTOR SHOULD BE ALLOWED TO ENTER INSURANCE INDUSTRY WITH MINIMUM PAID UP
CAPITAL OF 100 CRORES
3. PERMISSION TO
FOREIGN INSURANCE COMPANY AS JOINT VENTURE WITH INDIAN PARTNERS
4. SETTING UP OF
REGULATORY STRONG BODY TO REGULATE THE INSURANCE SECTOR
•
OBJECTIVE
1. TO DEVELOP
THE COMPETITION IN THE BUSINESS OF INSURANCE AND TO MAKE BOTH THE PRIVATE AND
PUBLIC SECTOR TO WORK EFFICIENTLY IN THE INSURANCE BUSINESS
2. TO CREATE
MORE OPTION ON THE SIDE OF CUSTOMERS TO PURCHASE THE POLICIES
3. TO ATTRACT
MORE AND MORE PEOPLE TOWARDS THE INSURANCE BUSINESS
4. TO EARN
FOREIGN EXCHANGE
5. TO RAISE THE
CAPITAL INVESTMENT OF THE PEOPLE
6. TO CREATE MOR
EMPLOYMENT
•
PRIVATISATION
1. OPENED TO
PRIVATE SECTOR IN FEB 1997
2. INSURANCE AND
DEVELOPMENT AUTHORITY ACT WAS PASSED BY THE PARLIAMENT AND PRESIDENT OF INDIA
GAVE HIS CONSENT ON 29 THE DECEMBER 1999
•
IRDA AIMS TO FULFILL THE FOLLOWING OBJECTIVES:
1. FOR ESTABLISHMENT OF AN AUTONOMOUS AUTHORITY TO PROTECT THE INTEREST OF THE INSURANCE SECTOR
2. FOR
REGULATION OF PROMOTION AND STEADY GROWTH
3. THE ACT AIMS
TO AMEND THE INSURANCE ACT 1938;LIFE INSURANCE CORPORATION ACT 1956 AND GENERAL
BUSINESS ACT 1972
•
IMPACT OF PRIVATIZATION AND
1. OPPORTUNITIES
2. CHALLENGES
AND THREATS
3. STRATEGIES
•
OPPORTUNITIES
1. UNTAPPED
MARKET:- NEW COMERS IN INSURANCE INDUSTRY WILL GET THE ADVANTAGE OF UNTAPPED
POTENTIAL MARKET FOR INSURANCE PRODUCTS
2. MANDATORY
INSURANCE:-IN DISASTER PRONE AREA,GOVERNMENT OF INDIA IS GOING TO MAKE INSURANCE
MANDATORY.
3. MORE PRODUCTS
OFFERED : MORE COMPETITION WILL SPUR FIRMS TO OFFER SEVERAL NEW PRODUCTS AND
MORE COMPLEX AND EXTENSIVE CATEGORIZATION
4. GROWTH OF THE
ECONOMY:WITH ALLOWING HOLDING OF EQUITY SHARES BY FOREIGN COMPANY EITHER ITSELF OR THROUGH ITS SUBSIDIARY COMPANY WILL SUPPLEMENT DOMESTIC SAVING AND ECONOMIC
PROGRESS THE NATION
5. BETTER
CUSTOMER SERVICE
•
CHALLENGES
1. NEW INSURER:
WILL HAVE TO INVEST A MINIMUM CAPITAL OF RS 100 CRORE AND LOCK IN PERIOD IS OF
5 YEARS.ALSO HAS TO FACE THE PROBLEM OF SHORTAGE OF MANPOWER AND ALSO HAVE TO
SPEND MONEY ON SETTING UP INFRASTRUCTURE
2. EXPECTATION
OF THE CONSUMERS:-AS THE PRODUCTS OFFERED BY GIC AND LIC ARE OUTDATED. SO THE
INSURANCE COMPANIES HAS TO OFFER NEW AND INNOVATIVE PRODUCTS.
3. PREMIUM ON
CUSTOMER SERVICE:- FOR GIVING BETTER SERVICES INSURANCE COMPANY HAVE TO SET UP
VARIOUS CALL CENTER
4. CONSUMER
EDUCATION
5.
CHALLENGES
6. CONSUMER
EDUCATION
7. CONSUMER
GRIEVANCE REDRESSAL: THE INSURANCE COMPANIES HAVE TO FACE AN ACUTE PROBLEM OF
THE REDRESSAL OF GRIEVANCE OF CONSUMERS. THE IRDA HAS ALREADY APPOINTED
OMBUDSMAN FOR LOOKING INTO THE GRIEVANCE OF THE POLICY HOLDERS
8. NEW PRODUCT
INNOVATION:- IN INDIA ONLY TWO PRODUCTS OF LIC DOMINATE WITH MAJORITY SHARE OUT
OF 52 PRODUCTS.
9. POSITIONING
OF THE INSURANCE PRODUCTS
10. EXPLOITATION
OF RURAL AREA
11. INFORMATION
TECHNOLOGY
•
STRATEGIES
1. ENVIRONMENTAL
ANALYSIS
2. RESTRUCTURING
ORGANIZATIONS
3. SPEED,COST
EFFECTIVENESS AND INNOVATIONS
4. HUMAN
RESOURCE DEVELOPMENT
5. EFFICIENCY IN
DISTRIBUTION
6. RISK
MANAGEMENT
7. EFFICIENT
MARKETING STRATEGIES
•
ARGUMENT IN FAVOUR OF PRIVATIZATION
1. PRIVATIZATION
OF INSURANCE ELIMINATED THE MONOPOLY BUSINESS OF LIC AND GIC
2. RESULTED IN
BETTER CUSTOMER SERVICE
3. THE ENTRY OF
NEW PLAYERS HAS SPEED UP THE SPREAD OF BOTH LIFE AND GENERAL INSURANCE
4. WILL ENSURE
ORE MOBILIZATION OF FUNDS
5. MORE
EMPLOYMENT OPPORTUNITIES
•
ARGUMENTS AGAINST PRIVATISATION OF INSURANCE
SECTOR
1. SURPLUS FUNDS
: LIC WAS ESTABLISHED IN 1956 WITH A CAPITAL OF RS 5 CRORE AND 361392 CRORES ON
MARCH 1996 WHEN THIS SECTOR IS GROWING AT RAPID PACE NO NEED FOR
2. SCOPE FOR COMPETITION IN THE RESENT SET UP: COMPETITION CAN BE CREATED EVEN WITHOUT
PRIVATIZING INSURANCE BUSINESS
3. LONG TERM
SOLVENCY NEEDED:- AS THESE COMPANIES HAVE LONG TERM SOLVENCY NO NEED TO BRING
4. WITH THE
ENTRY OF MULTINATIONAL INSURANCE COMPANIES IN INDIA SECTOR THEY WILL BENEFIT
MORE AS COMPARED TO INDIAN COMPANIES
5. PRICING
WARS:-INSURANCE AT PRESENT IS A MONOPOLY OF LIC AND GIC THERE IS NO PROBLEM IN
FIXING PREMIUM RATES FOR DIFFERENT TYPES OF POLICIES, WHEN PRIVATE AND FOREIGN
COMPANIES ENTER THIS SECTOR THERE WILL BE IN CUTTING OF PREMIUM IN VARIOUS
SECTORS
6. PRIVATE
SECTOR DOES NOT PAY ATTENTION TO SOCIAL OBLIGATION
7. NOT NECESSARY
PRIVATE SECTOR WILL BE EFFICIENT. NO CONNECTION OF EFFICIENCY WITH OWNERSHIP
No comments:
Post a Comment