The knowledge and governing capabilities of the Boards of Directors of most non-life insurers (in the detariffed scenario) not meeting the high governance standards expected by the Insurance Regulatory and Development Authority (IRDA) hamper the desirable growth in the industry. With more insurance players flooding the market, such governance issues are likely to get more serious.

In an industry, like insurance, where the shareholding is still restricted to one or two shareholders in each company, the interests of the unorganized stakeholders, particularly the consumer community, and the distribution networks, can be better protected by a good corporate governance code. Insurance is a financial safety net to those that can afford to buy it. The entire citizenry of India are its potential consumers. A decade is long for a limited number of shareholders to have enjoyed a market monopoly.

Has the Insurance Regulatory and Development Authority (IRDA) ensured that the dominant shareholding in the industry has worked in the interests of the consumers, and not in the self-interest of the investors? Are supervision of solvency of insurers, and the mere enactment of regulations on protection of consumer interests sufficient enough to check corporate behaviors? Are the disclosure norms and transparency standards of insurers good enough? There is a definite need for IRDA to involve consumers to express their responses through a market mechanism. A customer's privilege to shift business from one insurer to another or through expression of complaints on claims need not necessarily be the only alternatives available to customers.

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