11th May, 2008

One look at the sales figures for 2007-08 will reveal the distribution power of the life insurance industry. Last year, the industry sold over 5 crore insurance policies of which over 1.1 crore policies were sold in rural areas. Not the so-called rural areas which are today’s industrial hubs, but the real rural areas in terms of the stringent definition set out by the insurance regulator.

The industry has over 2 million active agents on the streets who can reach a new financial product to a large chunk of the population within weeks of its launch. While this network is the backbone of the industry, it is also its weakness. One of the biggest challenges before the Life Insurance Council — an association of life insurance companies — is to convince members to spend more resources to ensure that agents are equipped to provide sound advice. At the same time the council has to convince the government, regulators and customers that there is a cost involved in maintaining a robust distribution network and the industry is justified in passing some of this cost to the consumers.

This task now falls on Sunil Behari Mathur, the new chief executive of the Life Insurance Council. After the former chief executive SV Mony retired last month, chiefs of life insurance companies elected to appoint Mr Mathur as the new representative for the industry. The good part is that Mr Mathur is quite well placed for the job. The former chairman of the Life Insurance Corporation has the stature to carry a diverse industry along with him. In fact, it was partly because of his support as the head of the country’s largest life insurer that the council got formed.

Source : http://www.economictimes.indiatimes.com/