The recent hike in the FDI limit in the insurance sector will spur the growth of the industry in a big way, M. Radhakrishnan Nair, Member (Finance and Investment), IRDA has said.
He pointed out that the hike in the FDI limit to 49 per cent in the Union Budget would bring more foreign capital to the industry. “This would help companies to expand its operation at a rapid pace and also help improve technology”, he added.
The post liberalisation, he said, the insurance industry has witnessed impressive growth with life insurance business growing at a rate of 18.42 per cent in the last 14 years. Similarly, the general insurance sector has seen a growth of 16.62 per cent. The entry of standalone health insurance companies has resulted in increase in general insurance premium.
He was speaking to Business Line on the sidelines of ''Kerala Insurance Conclave: Towards Development and Better Delivery" organised by CII.
According to him, the growth in health insurance has been steady with a CAGR of 33.11 per cent. The rapid growth is expected in the health insurance segment since the penetration of health insurance is abysmally low and healthcare expenditure continues to go up. The key growth drivers for the industry are fiscal incentives, capital, distribution reforms, and consumer awareness and consumer protection, he added.
Earlier, speaking at the conference, Nair said that the future agenda for the sector include leveraging technology, pricing the agriculture insurance for wider coverage, expanding the health insurance coverage by taking advantage of government sponsored schemes, launching of new products like catastrophe bonds and mechanism for tapping uninsured vehicles.
Speaking on the occasion, VP Nandakumar, Managing Director and CEO, Manappuram Finance Ltd said “we can see that insurance regulatory framework has evolved over the last decade to match needs of the sector. It is estimated around 14 crore policies are sold every year.
“We claim that we have a better human development index thanks to the emphasis given to education, health etc. But is it a sustainable model? In the field of higher education, health, building of infrastructure, power, can we evolve a PPP model which can sustain economic growth.”