The Indian life insurance sector may witness de-growth of 13-14% this fiscal, Insurance Regulatory and Development Authority (Irda) said on Friday. According to Irda statistics, the first-year premium of life insurers has decreased 17% at R71,952 crore up to December 31, 2011, compared to R86,697 crore over last year.
Speaking on the sidelines of a seminar on ?Addressing distribution challenges in insurance sector?, organised by the CII, J Hari Narayan, chairman, Irda, said: ?I think insurance companies will wind up with a de-growth.?
He said a greater amount of soul-searching is taking place in the financial sector all over the world. ?No doubt, most often, the soul searching takes place when there is a crisis. It happened in the banks. And now there will be significant downturn in the insurance industry,” he said.
The decline in the business of private insurers was higher at 20% compared to the state insurer, Life Insurance Corporation of India, which suffered a 15% dip in the first-year premium.
In its recent report on Indian Insurance industry, Bank of America Merrill Lynch had said the top line growth has already taken a big hit after the new regulations. ?We believe the industry has bottomed?. Although margins have contracted, we expect top line growth to be flat in FY12 and 10-15% in FY13. We believe the new business margins should stabilise at more unsustainable levels of 14-16%,? it said.
Irda is also working on the repositories and contractual liabilities to suit to the requirements of a paperless insurance industry, which is expected to be in place in a year. ?Paperless insurance, I hope, will come in a year. First repository has to be completed. Repository must start functioning in manner it?s designed to. And once it attains certain level of capability, then we can think of insurance companies developing those kinds of products,” he said.