Page 24 - Life Insurance Today March 2016

This will support the growth of the online sales channel as
customers become more accustomed to the electronic
portfolio format. Gross direct premium income of the
general insurance industry, consisting of 28 players,
including five exclusive health insurance players, increased must rest with Indians at all times. In October 2015,
from Rs 26,110 crore in 2006-07 to Rs 84,686 crore in
2014-15. The capital employed by general insurers
increased to Rs 43,546 crore from Rs 16,527 crore during
past one decade, while investments have also gone up by
more than fourfold - from Rs 31,584 crore in 2006-07 to
Rs 1,39,887 crore in 2014-15.
The number of offices has increased from 5,112 to 10,381,
while policies issued have more than doubled from 6.04
crore to 12.60 crore during the past decade. Moreover, net
retention ratio also increased from 67.6% to 78.90% during
the period. Far from just being another channel, the
impact of digitalisation is transforming what customers
expect, creating fresh opportunities to get closer to the
customer and moving non-life insurance from a price to a
value consideration. Indeed, rather than a digital strategy, its full growth potential and contribute towards the overall
the key objective for insurers should be developing a
business strategy for the digital age.
The year 2015 was the busiest for Indian Insurance
companies not only from the point of view of compliance
with the new regulations but also due to the passage of
the Insurance Laws (Amendment) Act 2015. The Act
allowed foreign direct investment (FDI) in the sector to
increase to 49 per cent from 26 per cent. While most of
the foreign joint venture partners have applied to the
Foreign Investment Promotion Board (FIPB), the real test
24 March 2016
of compliance to Indian management control norms lies
in the year 2016.
The Insurance Act now stipulates that management control
Insurance Regulator brought out the norms for Indian
management and control. Earlier, it was assumed that
Indian management control norms would only be
applicable to those insurers whose foreign partners
increased their stake to 49 per cent. Accounting firms and
insurance consultants have been appointed by all
insurance companies with foreign partners to work on the
contours of the agreements.
Even approvals for FDI hike proposals would be received
from IRDAI only if management control is in hands of
Indians. Further, since FIPB has given IRDAI the
responsibility to ensure compliance, they are having a
closer scrutiny on all existing agreements. The
amendments are expected to enable the sector to achieve
growth of the economy and job creation.
The global economy is expected to strengthen moderately
in 2016, supporting insurance premium growth in most
regions, according to Swiss Re's latest publication, Global
insurance review 2015 and outlook 2016/17. Demand for
non-life insurance is expected to grow, led by an 8% to 9%
annual gain in the emerging markets in 2016 and 2017.
The life insurance sector faces challenges, in particular
from ongoing low interest rates.
Nevertheless, global life premiums are forecast to rise by
about 4% in each of the next two years, led also by the
emerging markets. The US and the UK economies are
currently growing by close to 2.5%, and real gross domestic
product (GDP) growth in Japan and the Euro area are a
more subdued 0.7% and 1.5%, respectively.
The four economies are all expected to see slightly better
growth in 2016. Emerging markets will grow by about 5%
in each of the next two years, an improvement on the
current 4% pace. Year 2015 has witnessed increase in the
general alertness of people with regards to healthcare and
insurance primarily owing to awareness led by
Government schemes, spurt in catastrophic events and
increase in medical inflation including OPD expenses.
Customers are now keen to evaluate the credibility of
hospitals in terms of association of doctors, hospital's
Life Insurance Today