The life insurance sector is estimated to grow by up to 15 percent annually over the next five years, mainly due to multiple regulatory and industry changes brought in over the past few years and due to favourable demographics of the country, an industry body said Thursday.
Mumbai: The life insurance sector is estimated to grow by up to 15 percent annually over the next five years, mainly due to multiple regulatory and industry changes brought in over the past few years and due to favourable demographics of the country, an industry body said Thursday.
"The worst is over for the life insurance industry that has not seen very positive growth figures in the past few years.
"With favourable demographics, new products launches on the anvil, industry expanding their operations and infusing efficiencies, the (insurance industry will see significant growth in India," Life Insurance Council Secretary General V Manickam told reporters here.
He further said that favourable demography, which is the insurable population, is expected to grow to 75 crore and life expectancy to 74 years by FY2020, which would help achieve spurt in the preference for Life Insurance.
Thus, life insurance, which is the second most preferred financial instrument, would drive the growth in net household financial savings to an estimated 35 percent of total savings in next seven years, compared to meagre 26 percent in FY10.
"The life insurance industry is expected to record a CAGR of 12-15 percent over the next five years and the penetration measured as the percentage of insurance premium to gross domestic product (GDP) is likely to grow to five percent by year 2020 from current 3.2 percent," he said, adding that the current size is Rs 2.8-3 lakh crore.
When asked on extension of time for the filing of products under new product guideline, Manickam said: "We have given a representation to the regulator and are hopeful of a positive response."
Life Insurance Council also estimated a potential foreign exchange inflow of USD 10 billion in near term, when the FDI in the sector rises to 49 percent, as proposed by the Centre.
The rise in the permissible limit would bring in stable capital inflows and help the industry mature faster.
Recently, IRDA has granted license to five Repositories that are authorised to open e-Insurance Accounts.
"These accounts will help safeguard policyholders to hold insurance policy documents in electronic format and also provide access to the insurance portfolio online," Manickam added.
Life insurers are also planning to expand their distribution channel and increase the number of life insurance advisers to more than 30 lakhs over next five years and is expected to contribute Rs 3,50,000 crore towards the infrastructure projects by FY2020.
The Life insurance industry has witnessed growth in assets under management (AUMs), with investments that have been targeted towards deployment of funds enabling infrastructure growth in the country.
The AUMs of life insurers have risen to Rs 17,41,175 crore as on March 31, 2013, compared to Rs 1,94,010 crore in 2000-01, a growth of around 900 percent.
The total benefits paid to customers by life insurance industry in most challenging period, has increased to Rs 1,91,336 crore as March 31, 2013, compared to Rs 1,41,806 crore as on March 2011.
In addition, he said, there has been an improvement in death claims settled by life insurers in terms of number of policies and by amount and the time taken to settle claims.
On the drive against spurious callers, Manickam said, the council has set up a ethical standard sub-committee for customer services, which will discuss the issue and come up with restrictions that will help the industry on how to deal with the situation in another 1-2 months.