| Adsul: Tough stance
Mumbai, Dec. 14: The government is mulling over the possibility of fixing a “quota” for private general insurance players to provide risk cover for motor vehicles, Union minister of state for finance Anandrao Adsul said today. He was speaking on the sidelines of an insurance seminar organised by Prabodhan Prakashan, a pro-Shiv Sena outfit.
Adsul said that non-life insurance companies were suffering huge losses due to bogus claims as a result of which insurance players were not favourably inclined to this business. Hence, there was a need for enhanced participation from private players.
Accordingly, a decision would be taken on mandatory quota for private players, he said. The minister added that while there is resistance to raise the premium for motor insurance, the authorities were willing to discuss the issue with transporters.
Sources in the industry said that although the idea of asking the private sector to take up motor insurance as a part of their overall business would not be welcome, companies would “do it very selectively” if such a condition is to be imposed. “They will then be very selective in their approach and may insure only those which are considered profitable,” an analyst added.
A significant part of the business done by most of the private sector general insurance companies is through corporate insurance, unlike the public sector companies where motor insurance plays an important role.
Adsul also said that the government is mulling over a proposal to hike the limit on foreign investment in insurance sector from 26 per cent to 49 per cent.
“We are working on the proposal to raise the ceiling as growth in the insurance sector will increase employment opportunities,” he said.
The minister, however, hastened to add that no time limit has been set for taking a decision on the issue as the government wanted to consult industry and stakeholders.
The issue had recently attracted a lot of interest, particularly after the N. K. Singh Committee called for hiking foreign stake in an insurance venture. Recently, the US Treasury Secretary also pitched for an increase in foreign shareholding. However, IRDA chairman R. Rangachary had ruled out any hike in this limit.
Speaking at the seminar, Adsul said that the insurance sector coverage in the country was very low by global standards but with the entry of private players awareness about risk cover had grown in the last two years. “There is a lot more room to raise the awareness and insurance coverage through innovative products,” he added.
Life Insurance Corporation of India chairman S. B. Mathur said that the role of insurance advisors was crucial in expanding the business and the state-owned insurer has added 1 lakh agents in the seven months of this fiscal.