Case Study: Four problems general insurers should overcome to simplify insurance by Joydeep Roy Despite the fact that the general insurance business in India has been growing at a healthy rate of over 16 percent annually between 2004-05 and 2008-09. its penetration level is just 0.60 percent of India's GDP against the world average of 2.14 percent, as per a joint research paper released by CRISIL and ASSOCHAM. The major challenges in the general insurance segment are -low awareness and willingness among customers; low penetration in smaller cities and rural areas: and lack of robust distribution models beyond tier I cities.

Problem # 01 Majority of insurance products are sold through agents and it is seen as a 'push' product by the customers. Many times, products are pushed by the distributors without explaining the benefits and limitations of the policy. leading to a high dissatisfaction ratio amongst the customers. IRDA is in the process of making guidelines for 'mono line' insurance agents. These insurance agents will be authorized to sell one simple insurance product and will undergo training. Post-training these agents will get policy documents that are very simple and easy to understand. The forms will be pre-underwritten and preferably a one-page document. This move may lead to improve understanding and simplifying the insurance process.

Problem # 02 The policies which exist in the markets today are complex and difficult to understand even for a financially literate person. The policy document runs to several pages. and is full of legal jargon beyond the comprehension of ordinary people. Insurance needs to be positioned and perceived as a more 'humane subject.' For e.g. !RDA's initiative on standardizing definitions for Critical Illness will benefit the customers and will find a better acceptance among the insurance buyers. They will no longer be confused about the benefits and exclusions about the illness in the health insurance policy.

Problem # 03 Insurance is a legal contract between an average person and the insurance company. Most of the insurance policies are drafted by the insurance companies and the same is accepted by the insured as it is without any negotiation or discussion. The insured does not have any say in establishing the terms and conditions of policy and has to adhere to policy terms as drawn by the insurer. Simplification and usage of the local language to explain the insurance covers with policy literature can bring comfort to the policyholders. It will help buyers accept the terms and conditions with a clear understanding of the benefits and the exclusions.

Problem # 04 Complicated claim settlement processes pose a problem to the existing customers and act as a major deterrent to the prospective customers. The intent of the insurance policy may not be clearly understood in the policy document for a simple insured. Instead of being a source of comfort in a crisis situation, the claim settlement process should not become an additional source of trouble to an already bothersome situation. The very purpose of insurance stands defeated.

The clarity in language. easy operations and a friendly approach by the insurers is the need of the hour. Moving forward, insurers will need to focus on customizing products and improving customer experience in order to grow profitably.

There is an inherent need for simplification and better information, which would help customers to build product understanding and take greater control of the purchase process.

01. Discuss the solutions to problems listed in the article with respect to simplification and promotion of General insurance Products.

Q2.Evaluate the rationale for certain non-life insurance products as an essential requirement for the general masses.