Foreign Direct Investment and the Risks to India's Insurance Sector

To tamper with licensing in the guise of development is the definition of corruption. The idea that India needs Foreign Direct Investment (FDI) to market or enhance customer experience now merely dusts a bland doughnut with processed sugar, and ups the risk of Type-2 diabetes, whose rise since the 1960s with obesity should give burglar alarms a run for their money.

Why FDI in Insurance is Not Acceptable

Just because The Nations Noise is not telling you that it's a scam doesn't make it alright. I am glad you put this question up because it needs answering. Before I launch into the question, all I know about general insurance is from having worked since 2001 with claims of marine hull which are still pending appeal in the SC. My employer was a Development Officer for a reputed nationalized insurer. The professional I am is owed to a man who is no longer alive.

General or life insurance is not about a nominal premium that you pay and forget every year. It is about under-writing risks, fairly assessing losses, and reasonable timely claim-settlements. As soon as you introduce a capitalist FDI into this sector, you are booting out the chance that you would receive a single paisa should something happen. The more the money involved, the higher the risk. At the same time, continued successes in getting away with it will make the insurer greedy. Claims of nominal amounts will begin to be refused because of paperwork our foreign partner wants to have a look at this before we hand you the cheque.

Risks in the Insurance Sector

The government has been doing it because people did not know they could ask for better treatment. Next, a brief idea of what a risk is in terms of the sector:

Americans have malpractice insurance, meaning that if a doctor kills someone, the insurer will pay the family of the deceased. Clever, no?li> Personal Accident - not weighed against the injury but only about the loss of a limb or death, so you pay a Re and think that you are all set. Cashless Hospitalization or Mediclaim - tests that you don’t need that are experimental, all because your insurer is paying. Motor Accident - fought tooth and nail in courts for years till the rupee devalues while the rash driving continues or the accused dies in one. Householder or Burglary - police get some of the loot while you watch your neighbor’s TV and await the return of at least some of your assets. Shopkeeper - jewelers who have poor sales claim they were burgled, while grocers allege pillage. Insurer shrugs, owner is responsible. Overseas Mediclaim - I have no idea how these things help because, for some reason, no one got hit by a bus or fell sick when abroad. Serious. Fire - only factories and warehouses that are not doing so well burning empty cartons claiming huge losses. Machinery Breakdown - write off depreciation annually, and when the value is too low, claim to replace it FOC. Computer or Mobile Theft - it would be cheaper to buy a new one than to chase after police, lawyers, and wait in courtrooms.

Above are mere illustrations. Forgive me for sounding negative, but prevention is better than cure, and why you asked this question in the first place. Policies cover personal, commercial, industrial, liability, bank indemnity, and social group personal accident, rural health, etc. risks. There have been some sterling examples of compassion and empathy without FDI being in the picture. Imagine the insurance agent who sold you that policy holding your hand while your family and friends are yet to arrive at the hospital. Now compare that with ambulance chasers.

Loss Assessment and Brokerage

Loss assessment adjusters and surveyors are the lawyers of the insurance industry. The underwriter is bound by their calculation and no matter how low you feel the estimate is, your cheque will not be fattened by kindness. No one trusts their own family members in business. Reliance Petroleum was under construction when the cyclone buried workers in debris. Reporting minimal losses to the press, the refinery claimed a whopper from Lloyds. The corpses were covered with salt from the coast.

No to FDI

FDI, no thank you. We can take care of ourselves and fly out of India. The Insurance Regulatory and Development Authority of India (IRDAI) did not want publicity or legitimacy when they started. Vodafone can con me and hire the best lawyers to defeat me, but if BSNL so much as even suggests something fishy, I will sue them until they weep.

Is FDI the Only Answer?

The question here is the credibility of a government that has indulged in more PR exercises like Swachch Bharat, Jan Dhan Yojna, the list is long and irrelevant than delivering on the promises that got them a majority in parliament. If FDI is the only answer, then please as the democracy 'rule of by and for the people' beg the question. Power does not stick with those who take it for granted; those who know that knowledge is power are their constitutional fundamental right and must take it back from them.

Conclusion

India has seen many absurdities in the past. No one killed Jessica Lal, but as a people informed and awake, we have comprehended the dangers of peace and order. Has eventually prevailed. If a mistake has been made, it is better late than never to correct it. Lost the CWC 2015 to the host, stop moaning and start preparing to win it back. Time and tide wait for none.