Insurance Industry: Domestic investments will match FDI soon

Jayarama Emani | The Dollar Business “Domestic investments in Insurance Sector will match with Foreign Direct Investments (FDI) sooner or later,” said Mr T S Vijayan, Chairman, Insurance Regulatory and Development Authority of India. Talking to The Dollar Business at Hyderabad after releasing a CII report on “India Insurance Vision 2025: Building a USD 250 billion customer centric and value creating industry”, Mr Vijayan said that apart from FDI, other factors like stabilisation of the economy and Gross Domestic Product (GDP) growth will also determine the growth of the Insurance Industry in India especially with regards to penetration. Under the aegis of CII National Committee on Insurance & Pensions, CII had commissioned the Vision Document on “India Insurance: Vision 2025” to McKinsey and Company. The study clearly embarks on defining the future vision and action agenda to achieve it, separately for Life, General and Health Insurance sectors The report said that the Indian insurance industry is currently the 16th largest market and is expected to be one of the top 10 markets by 2025. The last few years have been challenging for the industry with declining growth in life insurance premiums and significant challenges in non-life profitability. This was driven by a combination of macro-economic factors and structural challenges inherent in the insurance industry. However, an improving economy with potential regulatory reforms and concerted action by the industry players can usher in an era of significant growth as well as value creation. The report recommended an inclusive, progressive growth for the industry over the next decade. This will enable life insurance industry to grow at 12% CAGR over next decade to reach USD 160 bn – USD 175 bn and general insurance to grow at 22% CAGR to reach a GWP of USD 80 bn. “The insurance industry has the potential to grow three to five times in size over the next decade. For this to happen, policy action by the regulator, collaboration between players, individual player’s push to develop distribution and technical capabilities would be critical”, said Analjit Singh, Chairman, CII National Committee on Insurance and Pensions and Chairman, Max India Ltd. “Last few years have been challenging for the insurance industry with declining growth in life insurance and profitability challenges in non-life. However, an improving economy and a stable reformative government action plan can help drive significant growth and value-creation over the next few years”, said Sanjiv Bajaj, Co-Chair, CII National Committee on Insurance and Pensions and Managing Director, Bajaj Finserv Ltd. The CII also recommended few steps that are a must to achieving the insurance industry vision 2025 which are published on its Website. Mr. Sanjiv Bajaj, Co-Chair, CII National Committee on Insurance & Pensions & Managing Director, Bajaj Finserv Ltd.; Mr. Ashok Kumar Roy, CMD, General Insurance Corporation of India ltd.; Mr. R Chandrasekaran, Secretary General, General Insurance Council; Mr. Kshitij Jain, MD&CEO, Exide Life Insurance Co. Pvt. Ltd.; Mr. Rajesh Sud, MD&CEO, Max Life Insurance Co. Ltd; Mr. V Manickam, Secretary General, Life Insurance Council, besides many others joined the meeting.  

This article was published on February 26, 2015.