Do not mis-sell products: FM tells insurance companies
Finance minister P Chidambaram on Monday urged insurance companies from mis-selling products and asked them to design simple products as it would help boost flagging growth in the sector.
"In my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products. If you want to sell insurance to India, you must sell simple products and must make it absolutely clear to agents and other officers that they should not mis-sell," Chidambaram said at the launch of PNB Metlife Insurance.
India is one of the most under insured countries in the world with insurance penetration at less than four per cent of the GDP. To improve dropping sales, insurers have also sought a relief package from the finance ministry including tax benefits on products.
But unlike the demand and spread of banking services, the demand for insurance products and the growth of insurance companies is quite challenging, the finance minister noted.
Pointing out that India is one of the most challenging markets in Asia, he said, "There are usually two measures to measure growth of insurance industry. First is the sum assured to GDP. In India, it's around 55 per cent, whereas the benchmark in developed countries is between 150-250 per cent of GDP."
The other measure, he said, which is more widely used is the penetration of insurance which is a premium to the GDP. "In fact premium to GDP has hovered around 4 per cent for many years. In the last couple of years it has actually declined a bit," he added.
PNB to buy 30% in Metlife
NEW DELHI: Punjab National Bank (PNB) on Monday signed a deal with Metlife India for acquisition of 30 per cent stake in the insurer. The new firm is named PNB Metlife India Insurance Company Ltd.