NRIs important for Indian insurance

A non-resident Indian is defined as a citizen of India who resides outside India, usually for employment or business purposes. As per the income tax act, a person is not a resident of India if he is not in India for a period of 182 days during the preceding year.

NRIs primarily live outside the country for the purpose of earning income and repatriate their earnings to India, with the primary intention of returning to India at some point later in their lives — either after retirement or before. Normally they visit the country once a year and invest their money primarily in India. These NRIs have a strong affinity towards the brands in India and are very much associated with Indian products and services, including insurance.

The current regulatory provisions of Irdai provide for the following forms of offices abroad: Representative offices or liaison offices abroad: These offices normally undertake only promotional activities to educate customers about insurance products and act as an extended arm of the Indian insurance companies.

Foreign branch offices: Indian insurance companies are allowed to set up foreign branch offices which can source business from NRIs and issue insurance policies to them. Further, the branch offices act as one window of policy servicing for all the policyholders serviced by that location.

Foreign insurance companies: These are promoted by Indian insurance companies which are registered in foreign countries, licensed/registered under the local laws of the country to sell insurance policies to local residents as well as NRIs.

NRI population

As per the statistics published by the ministry of overseas Indian affairs as of January 2015, the number of NRIs is estimated to be about 1.13 crore spread across 206 countries. About 28 lakh NRIs live in Saudi Arabia alone while another 20 lakh stay in UAE and 12.72 lakh in the US.

Some insurance companies, which have banks as their distributors, have opened representative offices primarily to service their overseas bank branch customers buying insurance products. Of late, some insurance companies have started applying for the foreign branch office model. LIC has promoted foreign subsidiaries in places like Bahrain and Nepal. In order to provide a better customer choice, there is scope for many other insurance companies tapping the NRI segment.

Online purchase

With the advent of tablets and smartphones, products comparisons online have become a lot easier and less time consuming. Intermediaries like web aggregators enable product comparisons online and enable informed decision by customers. For customers requiring assistance for buying online, tele assistance is available. Further, the need for physically signed applications can be eliminated for online cases, eliminating paperwork. Premium payments are made online through online payment gateways. If the NRI is able to access, review insurance products online and make purchase from the country where they reside, it would be an effective alternative option.

The above online process would not only be convenient and smarter from an NRI customer perspective, it would also promote competition, thereby expanding the customers’ choice. An appropriate regulatory framework would go a long way in promoting the online channel for NRIs.