Extent of Information Disclosure by Indian Life Insurance Companies on their Websites – An Empirical Study

DOI: 10.5176/2251-1997_AF-86

Authors: Dr. B. Charumathi

Abstract:

 World Wide Web has emerged as a new avenue to present insurance companies’ information. This study examines the extent of information disclosure by Indian life insurance companies on their websites. The insurance industry in India is undergoing one of the dynamic facets in its entire history after the entry of insurance watchdog Insurance Regulatory and Development Authority (IRDA) in 1999. The insurance market has witnessed the entry of a number of new players, introduction of new products, deregulation of policy rates, competitive marketing and thereby attracting a huge customerbase. At this juncture, IRDA felt the need for setting standards for disclosure of material information by insurance companieson their websites. For the purpose of the study, a list of items of information disclosure was prepared and subsequently they were classified into different attributes such as general attribute, financial attribute, insurance agent/advisor attribute, corporate governance attribute, policy holders attribute and shareholders attribute. In order to measure the level of information disclosure by insurance companies, an original Insurance Disclosure Attribute Index (IDAI) was constructedand scores were assigned for each attribute and finally overalldisclosure score for each insurance company was arrived usingIDAI. Each insurance company’s website was explored toidentify the availability of the above attributes. The sample for this study includes all the Indian life insurance companies both public (1) and private (22) numbering 23.

This study used statistical tools such as Chi Square Test, Correlation and ANOVA. The quality of insurance company’s website adds value to the stakeholders at large. The International Association of Insurance Supervisors (IAIS) has also recognized the need for the insurers to provide information on the risks faced by them. This would help the stakeholders in general andpolicy holders in particular to make informed decisions beforeentering into an insurance contract and to know the performance of their investments.

Keywords: Indian Life insurance industry, Website Information Disclosures, Insurance Disclosure Attribute Index.