Saturday, June 12, 2010

IRDA-SEBI face-off

For those who keenly follow the Indian financial market or those whose livelihood is linked to the Indian Insurace industry, a recent stand-off between the 2 Regulators recently would have come as a surprise. What do we make of it...

We have seen that in the last decade or so, with the privitization of the Insurance industry, many macro level changes have been weatherd by the industry players. Many of them have been for the better, but many of them have been retrograde in a sense.

However, given the greenfield nature of the domestic market, it was the Private players who have brough about a stronger focus on Insurance & Financial planning. Needless to say, the numerous employment opportunities it created, both directly & indirectly.

I do believe we are at the threshold of stronger & robust growth in this industry. Its in this context, that I would like to see how the IRDA-SEBI ordeal pans out.

My views...
* The fact that SEBI wanted to control some (or many) aspects of the Insurance industry does spell good news to the industry. In fact, they have taken notice of the impact that the Insurance players have on the overall market, though it is limited at this stage. Everytime we see the FII pulling out monies from the market, its the DIIs who come to the rescue.
* This tussle between the 2 regulators is, in the long run, for the interest of the Customer. Currently its the vested interest at play more than the "Customer Service" factor. The industry business numbers are high because of the focus on garnering market share. Very few players have a well setup system for proper financial planning, training, Customer service & Persistency management. This would change in the due course of time with the fight bringing in some clear direction
* Without the presence of a single financial regulator in India, there is bound to be areas where the multiple regulators would see a face-off. The multitude of regulators is clearly an area that the Government needs to take stock of. A similar paradigm can be seen in many of our town planning, where each civic authority carries out its activities with the possibilty of damaging some others

As someone rightfully said "Change is the only Constant". So with this IRDA-SEBI, we would see many changes coming about. The question is if this is beneficial to the industry. Or more importantly, where does your (or your company's) position be with respect to the changes

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