TRANSPARENCY IS THE KEY WORD FOR INSURANCE

 The recent news of Initial Public Offering (IPO) for the Government owned Life Insurance Corporation of India (LIC) for disinvestment purposes has been creating waves in the sector. Although, most of the insurance companies have already been listed, the change in the sector did not come so easily. The insurance sector was considered a traditional business-like money lending which worked around mutual companies. However, being a public limited company has its own benefits for the sector.

Insurance industry has been present around since many years. It started as a damage cover for the loss in businesses in terms of sea voyages, wars and business loss among others. However, gradually over the years, the insurance sector started growing and people understood the crucial need for insurance on valuable goods and services. Later, personal insurance, general insurance, property insurance and general insurance were introduced which helped the sector to grow in leaps and bounds. The demand for insurance brought new Government, Non-Government and several fresh personalized products for the policy holders.

In the recent years, many mutual companies converted into stock companies. Insurance companies sell policies that act as a payout benefit if a covered event occurs in policy term period. The policy holder has to pay the premium to the payor company which are considered as profits for the company. The IPO listing will provide benefits like profitability, accountability, transparency, value for securities, golden opportunity for capital raising initiatives, enhanced visibility and chances of foreign direct investment among others. The stock listed insurance companies can enhance their horizons through the IPO advantages and can contribute effectively to the country’s Gross Domestic Product (GDP).

This way both the companies and policy holders will be benefited giving a widened approach, organized business and streamlined procedures. Both the policy holders and customers can do their deals hassle free thus offering more products and services to the policy holders by providing a level playing arena for the healthy competition.