Mandatory opening of offices in rural areas will hurt insurers: IRDA

The provision of mandatory opening up of offices in towns and cities for state-owned public insurers will act as a strain on them, said a top official from the life insurance industry.

In the union budget Finance Minister asked the state-owned insurance companies including Life Insurance Corporation to open offices in towns with population with over 10, 000.

While addressing a seminar on insurance in Mumbai, said S B Mathur, part-time member, Insurance Regulatory and Development Authority, "While there has been a 7 per cent decline in new premium collection, there has been a 7 per cent increase in the expenses of life insurers to adjust to changes in the regulatory regime."

"In this scenario, the mandatory opening up offices will add to the expenses and act as a strain to the industry.

According to Mathur, the new lenghty and detailed standard proposal form for sale of life insurance policies will remain a challenge as it is suitable for complex products sold to high net worth individuals while the average premium per person annually is under Rs 13, 000 per annum for the industry.

Mathur said the new product guidelines by the regulator under which life insurers will have to refile and redesign their group products by July and individual products by October this year. This will impact 85 per cent of the products currently sold by insurers and will significantly affect sales of life insurers in FY'14.

deepa.nair@thehindu.co.in

Source: thehindubusinessline