Missing the woods for the trees

Venkatachari Jagannathan
04 January 2000

"The Insurance Regulatory and Development Authority (IRDA), in its quest for transparency in insurance company accounting, is missing the woods for trees". This is how, R Ramakrishnan, former executive director, Life Insurance Corporation of India (LIC) and also a member of the famed Malhotra committee on insurance reforms, reacted, when
asked for his views on the new accounting norms proposed by IRDA for life insurance companies in India.

With the impending liberalisation of the insurance industry, the IRDA has decided to draft new accounting norms for life and general insurance companies. This was, in its view, necessary to bring in greater transparency in financial reporting by insurance companies and prepare them for the transition from State monopoly to competition. However, except for a marginal difference, the norms for both the sectors are uniform.

Obviously, any attempt such as this, is bound to create a wave in the industry. According to K P. Narashiman, former LIC Chairman, "while transparency in business operations and its reporting is desirable per se, there is nothing like an optimum or ideal level at which the need to be transparent is reconciled with the requirement of not getting to be so open impeding competitiveness. Any widening of the coverage should be decided on a consideration of what added value that would give".

"This would facilitate faster issuance of policies and speedier claims settlement. Our computerisation will be customer-centric, and we shall migrate to web-based front-end operations," he says.

United India has already begun such activity in a small way. You can now get a premium quotation for it's the company's Mediclaim policy by visiting the company's website and feeding in your data. "We are getting active response from non-resident Indians for this," he says Mr Bhandari.

According to officials, the totally integrated underwriting, accounts and claims module would cover about 170 insurance products in the company's portfolio.