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The insurance industry should facilitate the exit of weak insurers through merger and portfolio transfer mechanism, according to the joint IMF-World Bank Financial System Stability Assessment Progamme report.
Third party motor liability issues, streamlining the health insurance portfolio, raising the bar for the actuarial profession in terms of specialisation, and formulating a framework for unit-linked insurance/pension products for insurers are some of the challenges that the Indian insurance industry faces, said the report.
The life insurance industry needs to achieve a healthier competitive environment, says the report. The Government must be given administrative scope to phase out Life Insurance Corporation’s government guarantee (or requiring LIC to price the guarantee into its products), raising the ceiling on foreign joint venture ownership from the current 26 per cent of issued equity.
The report recommends establishing a centralised fraud database for the medical insurance portfolio of insurers.
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