The insurance industry is faced with multiple challenges, while life insurance has seen de-growth in new business premium in FY12, non-life insurance is weighed down by underwriting losses. A multitude of changes in the regulatory landscape has given little time to the industry to adjust to changed market dynamics. Despite the challenges the insurance remains a market with huge potential with growth and emergence of individual lines of business like health.
However realizing the potential requires a concerted effort from the stakeholders. CII is organizing a one day Summit on Insurance on Monday, the 6th of August in Mumbai to bring together the key stakeholders for a constructive dialogue to find solutions and way forward to revive the growth. The role of the insurers, regulator and government is crucial and every one must work together towards sustainable profitable growth for the industry.
As the economy, per capita and disposable incomes grow in the coming decades the insurance industry is expected to grow as a channel for long term savings. However the key stakeholders need to work in tandem to create a conducive environment for sustainable profitable growth. While the industry needs to innovate, simplify products and build trust amongst the customers through effective distribution and claims management, the regulator needs to phase in changes based on regulatory impact assessment thereby giving industry time to adjust to the changed environment, along with initiatives to drive insurance awareness programmes. In addition the government may also look at speeding the process of reforms to drive the growth.
The CII - EY report ‘Insurance industry – challenge, reforms and realignment’ looks at the current state of the insurance industry and the challenges faced in areas of product, distribution, claims management and cost of operations within the overall regulatory and economic environment. The industry, regulator and the government will have to work together towards realignment of the growth to potential.
Among other things the following need to be worked on:
Simplification of life insurance products and focus on protection and long term savings rather than investment
Transparency of costs and riders
Streamlining operations and transparency of costs attached
Simplification of claims process
Level playing field in terms of tax treatment of financial products
Continuation of tax benefits for insurance products
Speeding up reforms in the non-life insurance space
Effective coordination between various government ministries for non-life and health products
Allowing space for innovation
Streamlined process of regulatory changes through discussions, regulatory impact assessment and phase-in of changes
Increasing focus and efforts towards increasing insurance awareness by the regulator