31 October, 2020

'Consumers Will Benefit'

Former RBI governor R.N. Malhotra, chairman of the committee set up by the Rao government to recommend insurance sector reforms, feels LIC and GIC need managerial autonomy to face private players.

'Consumers Will Benefit'
outlookindia.com
-0001-11-30T00:00:00+05:53

On private participation in insurance: The consumer will definitely have a better choice of products and in order to stay competitive, existing companies will improve their level of service. It could even improve the pricing of insurance products. Right now the overall penetration of insurance is quite low. One could hope that competition and the larger number of players would improve penetration.

But general insurance is where I see the major competition developing. Since India is industrialising fast, the new business generated would be quite large. Though existing companies would continue to do well, they would have to work hard to retain their market share. Besides, the industrial sector should see an increase in the number and range of products. The new kinds of risks that are coming up in sectors like telecom throw up peculiar kinds of challenges which will be met by sophisticated products.

On why life and general insurance companies should be separate entities: They are two different kinds of businesses. General...

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