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Pvt insurers must focus on rural India: Sinha

NetScribes/Pallavi Rao

Finance minister Yashwant Sinha has set stiff targets for private sector insurance players. At 1.2 per cent, India's insurance premium to the GDP was very low and must increase to 18 per cent of GDP, he said. Some Asian countries like South Korea have achieved a higher target of 32 per cent.

Inaugurating the HDFC Standard Life insurance corporate office in Bombay on Thursday, Sinha said that newer insurance companies should focus on selling insurance products in rural India. "The aim should be to raise the level of domestic savings in the country. Over 70 per cent of the total domestic savings comes from households, indicating the enormous potential for the insurance sector. We also need to provide better service to customers, for which more companies would need to enter this sector,'' he said.

HDFC was the first private sector player to have received permission to sell and distribute insurance products. It was in the 1998 budget that insurance glasnost had its seeds.

The finance minister laid down a four-point agenda which the private sector insurance companies would have to address. The main expectations are: New companies will have to ensure credibility eschewing questionable market practices. A pan-industry education effort needs to happen. Marketing and sales forces would have to be built if consumer awareness was to be improved. A better skilled sales force will have to be developed by high quality insurance consultants/agents.

He pointed out to the newer private players that a greater stress on the rural segment would not only ensure social justice but that it had great business potential.

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