Personal Finance Outlook 2013: Insurance - Long-term story intact
The year 2012 was a mixed year for the life insurance industry. While the challenges and uncertainties of last year still cast a shadow, the long-term prospects remain bright, given the strong fundamentals of the life insurance industry.
The sector saw some significant long-term developments that will enable it to move to a sustainable long-term growth trajectory.
Although the year started on a slow note due to inaction on the investment norms and annuity side, there was an increased willingness on the part of regulator to engage in frequent dialogue with insurers on all guidelines. This resulted in the removal of a 4.5% minimum guarantee on pension and annuity products. Clearing of the insurance Bill by the Cabinet was a long-awaited announcement. Though deferred to the Budget session, the action provided the industry the much-needed impetus and motivation.
One of the most significant developments for life insurance industry has been the strong emergence of the online channel. In 2012, players opened up the platform further and expanded the online product suite from just term plans to health and retirement as well. The platform will further reinforce the central theme of customer centricity and have multiple advantages for insurers, including controlling costs.
But the sector continues to grapple with challenges, such as choppy equity markets, high interest rate-high inflation scenario and regulatory pressures. Owing to the dismal macro economic conditions and sluggish domestic economy, in 2012, we saw a shift in consumer behaviour.
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