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P Chidambaram: Why in India there is no demand for insurance

India, July 02, 2013

Pointing at the muted growth of the insurance sector, Finance Minister P Chidambaram said that
the insurance industry can make rapid strides in India if insurance companies avoid mis-selling and sell only simple products.

Reasoning out the subdued growth observed in insurance industry, Chidambaram said, “in my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products. If you want to sell insurance in India, you must sell simple products and make it absolutely clear to your agents that they should not mis-sell the products.”

He further said, “we should ask ourselves why in our country, where there is demand for banking services, there is no demand for insurance?” Chidambaram also said that 'India is one of most under-insured countries in the world with the penetration of less than 4% of the GDP.'

"I think if you keep these two guidelines—simple products and no mis-selling--insurance will make great rise in the next few years," he added.