Having witnessed a drop in business for the last three years, the life insurance industry is likely to post a double-digit growth rate in 2013-14.
According to Sudhin Roy Chowdhury, Member (Life), Insurance Regulatory and Development Authority (IRDA), the growth will be spurred by an improvement in the country’s economic growth and less appetite for investing in gold and real estate. “In the last three years, we have seen a dip in business, but this year we expect the insurance industry to be on a growth trajectory. Gold is likely to lose sheen now and even real estate and stock markets have witnessed a dip. These could contribute to the growth in the insurance sector,” Chowdhury said at an insurance summit organised by the Indian Chamber of Commerce here on Saturday.
Final guidelines
The final guidelines on bancassurance are likely to be out next month, he said. “We have debated and re-debated and now we are trying to tie up loose ends. The whole idea was that all insurance companies should get a pie of the bank. This will help the industry grow,” he said.
Of the total 80,000 bank branches across the country only around 20,000-30,000 branches are currently selling insurance. “A lot of growth can be achieved if the rest of the branches also start selling the products,” he said. The regulator was considering the appeal made by insurers to have a tie-up with five or more banks.
According to the existing regulations, a bank can only tie up with one life, one non-life and one standalone health insurance company.
IRDA, Chowdhury said, was in talks with the Union Finance Ministry for waiving off service tax levied on the savings part of the life insurance premium.
Currently, service tax is levied on the total premium amount.
Waiver of service tax from the savings part could help boost the life insurance business in India. The dialogue was still at a preliminary stage, he added.
The insurance regulator would also lay more thrust on the use of analytics in the industry. IRDA has already set up a subsidiary — Insurance Information Bureau (IIB) — to collect comprehensive data for better product restructuring and pricing of policies. “We are trying to make IIB a world-class organisation to have a total picture of the life insurance industry in the long-run,” he said.
The general insurance industry is estimated to suffer losses to the tune of Rs 3,000-4,000 crore against claim settlement towards 245-odd damaged hydroelectric power projects in Uttarakhand following the flash floods. This apart, claims are also likely to pour in against motor vehicles and personal accident risk cover.
Plans are afoot to create a corpus of Rs 5,000 crore to set up a natural catastrophe insurance pool for India. IRDA and the Government are working on this, said Ashok K. Roy, Chairman and Managing Director of General Insurance Corporation.