India’s insurance sector may see de-growth of 13-14 per cent this fiscal, according to the IRDA Chairman Mr Harinarayan
“I think they (insurance companies) will wind up with a de-growth of something like 13-14 per cent (this fiscal),” J Harinarayana, Chairman of the Insurance Regulatory and Development Authority told reporters on the sidelines of CEO’s Roundtable, ‘Addressing Distribution Challenges in Insurance’.
He also said insurance as well as the financial sectors around the world were going through ‘tremendous amount of soul-searching’.
“No doubt most often soul-search takes place when there is crisis. It happened in the banks…Now there will be significant downturn in the insurance industry. As witnessed by de-growth of 15 or 16 per cent in the last month, compared to last year,” Harinarayana said in his speech earlier.
According to Irda figures, the first year premium of life insurers has decreased 17 per cent at Rs 71,952 crore up to December 31, compared to Rs 86,697 crore in the year-ago period.
The decline in the business of private insurers was higher at 20 per cent compared to the state-owned insurer, Life Insurance Corporation of India, which suffered a 15 per cent dip in the first-year premium.
Bank of America Merrill Lynch said in a recent report that the top-line growth of the Indian insurance industry has already taken a big hit after the new regulations.
“We believe the industry has bottomed… Although margins have contracted, we expect top-line to growth to be flat in FY’12 and 10-15 per cent in FY’13. We believe the new business margins should stabilise at… 14-16 per cent,” the report said.
Harinarayana said Irda appointed 6 committees comprising experts from the regulatory body, industry and academia to look at the aspects of regulatory architecture in India and to look at the experiences of the past 10 years.
Replying to a query, he said he expects paperless insurance policies to be in place within a year. According to him, repository system has to be completed before implementing the paperless insurance.
“Paperless insurance I hope it will come in a year. First repository has to be completed. Repository must start functioning in manner in which it is designed to.
