Bharti AXA looks forward to working with IRDA for developing a fair insurance market

According to Bharti AXA, improvement in customer value from ULIPs, on account of IRDA's efforts regarding increase in minimum sum assured, is welcome.

The company however pointed out that commission levels and shareholder margins are amongst the lowest in India as compared to other Asian countries. According to V Srinivasan, CFO, Bharti AXA Life Insurance Co Ltd, there had to be a fair return for all stakeholders concerned.

The reduction in surrender charges would have and unintended consequence of higher lapses and result in making ULIP more short term oriented said Srinivasan. He added, that Life Insurance companies would have to incur high capital strain for the acquisition of new business and they would be exposed to losses due to customer lapses/surrender. 

''The proposed changes will make it harder to look at innovative distribution channels and potentially will make banks as the key channel. We therefore remain concerned that some of the changes may result in quality distributors exiting the insurance market. Yet, the regulations do not allow for more than one life insurance company to tie up with a bank which would stop new entrants. The existing players who have a Bancassurance tie up are in an advantageous position,'' said Srinivasan.

''One would welcome a more positive approach from the regulator to develop a market for participating products and introduce moves such as to allow seed capital to be put forth by shareholders as is the case in Malaysia and Singapore. We look forward to working with IRDA in developing a fair insurance market for all stakeholders. ''