30/1/2014 India: Insurers concerned about background of service centres. Insurers in India are slow to appoint Common Service Centres (CSCs) as insurance brokers to sell life and general insurance policies, because they are unfamiliar with the operators of the 100,000 such centres that are scattered throughout the country. The Insurance Regulatory and Development Authority (IRDA), which is working on guidelines for the insurance operations of these centres, aims to increase insurance penetration in the country through the CSCs which are located in rural areas. CSCs are part the National e-Governance Plan, under which they provide web-enabled e-governance services. They handle government forms and certificates, like birth and death certificates, as well as collection of payments for electricity, telephone, water and other utility bills. Each CSC serves a cluster of six to seven villages. There is a discussion on whether all 100,000 CSCs can be made brokers. The present set-up may not be able to handle a sudden surge in brokers. Further, there is no past record of their service delivery model which we can rely on, the Business Standard quoted the chief executive officer of a private life insurer. Furthermore, at a time when the insurance regulator is placing emphasis on anti money-laundering (AML) practices, insurers are concerned about using the CSCs because they deal with cash. The chief distribution officer of a mid-size private life insurance company said: We do not have any background on the people who are part of each CSC. Since they handle other financial services like telephone bill, electricity bill payments, which involve continual cash transactions, we have to be doubly sure of how the AML practices are being standardised in the CSCs, before entering into any tie-ups. A senior executive of a large private general insurance company says that insurance companies will have to devise specialised products for the CSC channel. Too complex or technical products may be difficult for the CSCs to understand since they are not a core part of the insurance system. We will have to compromise on our innovative offerings since all companies will have to offer similar products through CSCs, the official added. Industry sources say that CSCs will be authorised to sell life and non-life policies after their personnel undergo the mandatory examination conducted by the Insurance Institute of India. With CSCs service requirements like birth and death certificates, there is also a worry about possible fraud in the system. The senior claims-servicing head of a bank-backed life insurance company says that systems have to be in place to ensure that the CSC staff who handle death certificates do not also handle life insurance claims.
Posted on: Thu, 30 Jan 2014 13:33:13 +0000
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