New Delhi: Concerned over subdued growth in the insurance sector, Finance Minister P Chidambaram on Monday asked the insurance companies to refrain from mis-selling and devise simple products for people to boost growth in the sector.
"In my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products.
"If you want to sell insurance to India, you must sell simple products and must make it absolutely clear to agents and other officers that they should not mis-sell," Chidambaram said.
He was inaugurating new brand of PNB Metlife following Punjab National Bank?s acquisition of a 30 percent stake in the company.
The Finance Minister said India is one of most under-insured countries in the world with the penetration of less than 4 percent of the GDP.
"I think if you keep these two guidelines--simple products and no mis-selling--insurance will make great rise in the next few years," he said, adding, the insurance companies should come out with such products which people can understand.
Drawing comparison, the Finance Minister said "while the demand for banking services and spread of banking services is extremely fast paced, the demand for insurance products, growth of insurance companies is quite tepid."
Terming insurance as a challenging business, the Finance Minister said India is one of the most challenging markets in Asia.
"There are unusually two measures to measure growth of insurance industry. First is the sum assured to GDP. In India, it's around 55 percent, whereas benchmark in developed countries is between 150-250 percent of GDP," he said.
"The other measure, which is more widely used is the penetration of insurance which is a premium to the GDP. In fact premium to GDP has hovered around 4 percent for many years. In the last couple of years it has actually declined a bit," he added.
Meanwhile, SMetLife India has expanded its insurance business with its partnership with PNB. The insurance company has been operating in the country since 2001.
In its first year, acting as a corporate agent for MetLife India, PNB posted premium of over Rs 600 crore, the bank's Chairman and Managing Director K R Kamath said.
PNB had announced picking up of 30 percent stake in MetLife India Insurance for an undisclosed sum in 2011.
Besides, PNB, other stakeholders of the company include the US-based Metlife, Jammu and Kashmir Bank, Shapoorji Pallonji and other investors.
First Published: Monday, February 4, 2013, 23:31