Keep products simple: Chidambaram to insurers

Finance Minister P Chidambaram has asked the insurance industry to stick to simple products and curb mis-selling if it wants to succeed in India.

Chidambaram said that India remained one of the most under-insured countries of the world and one of the most challenging markets for insurance companies.

"There are usually two measures to gauge the growth of the insurance industry. One is the sum assured-to-GDP ratio, which in India is 55 per cent, while in the developed countries this is 150-250 per cent. The other measure is premium-to-GDP ratio. The premium-to-GDP has hovered around 4 per cent for many years, but in the last couple of years it has declined a bit," noted the finance minister.

He was speaking at an event to unveil the new PNB Metlife logo.

He said that while the demand for banking products and their growth is extremely fast paced, the growth of insurance products is very tepid.

"We must ask why in a country where there is demand for banking products but not sufficient demand for insurance products? In my view, the insurance companies have stumbled in India because of mis-selling and complex products. If you want to be successful in India, you have to sell simple products and clearly tell your agents that they should not mis-sell products," said Chidambaram.

Metlife India Insurance Company would now be called PNB Metlife after Punjab National Bank acquired 30 per cent stake in the insurance company. Metlife Inc. holds 26 per cent stake in the company. Other shareholders of the company include J&K Bank, Karnataka Bank and Shapoorji Pallonji Group.