Financial Daily from THE HINDU group of publications
Tuesday, Nov 15, 2005
Money & Banking
Delay in claims settlement Oriental Insurance to focus on proper drafting of policies
Mr M. Ramadoss, CMD
Kolkata , Nov. 14
ORIENTAL Insurance Company Ltd intends to focus on proper drafting of policies with a view to eliminate problems that may arise during settlement of claims.
The company, which has proposed to process claims speedily, hopes to make sure that no genuine claim remains unsettled beyond a reasonable period.
Audit of policies relating to major clients has also been proposed, said Mr M. Ramadoss, CMD of Oriental Insurance.
Oriental Insurance, he added, is readying for de-tariffing, a regime marked by product pricing worked out by insurers.
Latest by December 2006, each insurer should be able to price the products. The move, it is felt, will ultimately benefit customers.
Already, there are indications that costs will reduce because of greater competition. However, a decline in rates should be compensated by an increase in volume.
The latter, for instance, should be felt in the case of private cars and two-wheelers.
Private cars, which are generally considered as "good risk", should see premium rates drop by 20-25 per cent.
In the case of two-wheelers, 60 per cent of the scooters and motorcycles plying on the roads are considered to be without insurance. This situation is likely to change, it is felt.
"There will be an incentive to take insurance in the days ahead," Mr Ramadoss said, adding the insurer is aware of the changing needs of customers and will focus more on servicing new customer segments.
He also referred to Insurance Regulatory Development Authority's efforts at ensuring that the message of insurance is appreciated by all. Mr Ramadoss was addressing an interactive session organised by the CII in Kolkata.
Insurance penetration is relatively low in the country, Mr Ramadoss said, stating that privatisation of the industry has lately helped expand the local market.
There is nevertheless greater perception among the public about life insurance, not non-life. In contrast, in countries such as the UK, even a modest retail establishment cannot start functioning without a liability policy.
Oriental Insurance, which hopes to work towards minimisation of losses and develop good risk management systems, has seen an Rs 8-crore net impact of the recent Mumbai floods.
Thanks to re-insurance, the bulk of its Rs 500-crore overall exposure has been covered.
During 2004-05, Oriental's gross direct premium topped Rs 3,000 crore, a 6.5 per cent increase (including premium secured outside India).
Net premium income, domestic and foreign, grew 9 per cent to Rs 2,218 crore.
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