How do you see the govt’s decision to allow 100 % FDI for insurance intermediaries? What will be its impacts on the industry particularly on the insurance broking front?
We welcome the government’s move to permit 100% foreign direct investment (FDI) in insurance intermediaries. Building a robust distribution network requires long-term capital. Companies are in constant need of funds to enter tier II or III cities and smaller towns across the country. Increase in foreign investment limit will bring in much needed capital, which can be used to augment the reach of intermediaries to cater to untapped customers from these markets. Insurance broking is a capital-intensive business, so this is good news on that front.
How do you see the government’s decision to review FDI cap of 49 per cent in the overall insurance industry?
The insurance industry in India is now mature with private players being in existence for 20 years. As manufacturers, the private life insurers now possess enough technical know-howboth on people expertise and technology capabilities, thereby reducing the need to cap foreign participation.
What kind of FDI limit you want in the insurance industry, either 74 % or 100%?
With increasing maturity, the FDI limits can be enhanced beyond 49%.
Do you think raising FDI limit would attract more players to the Indian insurance industry? Does the sector have scope for more players?
The life insurance industry is still under evolution in India and a higher FDI will bring in much needed capital into the picture, either to the life insurance industry, or release capital for other sectors of the economy.
Do you expect consolidation in the sector after higher FDI is allowed in the sector?
While the current regulatory framework is believed to be a significant enabler for consolidation in the insurance industry, greater FDI participation has scope to promote competition within the sector that could lead to more consolidation opportunities in a fragmented space.
Do you think after two decades of liberalisation, the industry has achieved its desired results? Which are the segments where the industry has succeeded and where it has failed?
The life insurance industry has evolved vastly in the last two decades and witnessed unprecedented growth. Life insurance can be regarded as an extremely important asset class to the masses of the country, and the AUMs (Assets Under Management) garnered by the industry are only second to bank deposits. As the industry now matures, it is crucial to drive focus around enhancing the core of providing adequate protection to cover the risk of death, disease and disability because India continues to face the severe challenge of under insurance.
Additionally, there is immense scope for insurers to actively participate in preparing the citizens for the golden days of retirement.
Are customers now favourably disposed towards insurance products?
Affluence and education levels of a country have a direct correlation with the appreciation for insurance products. It is noticed worldwide – higher awareness levels have improved a country’s insurance uptake. Similarly, through urbanisation, increasing affluence and education levels, India’s awareness and appreciation for the core value of insurance has seen a boost in the recent past. Life insurers in the industry will have to continue working towards building a financially protected nation by increasing citizens’ awareness levels.
How the Indian insurance industry should prepare itself for a Rs 5 trillion economy?
While we move towards a Rs. 5 trillion economy, the focus of life insurers needs to evolve at the pace the Indian consumers are evolving both in terms of their life stage needs and service expectations and create newer products basis their requirements. Stakeholders value transparency and strong governance systems, hence it will be essential for the industry to opt for sophisticated processes which are easily accessible to its customers. Additionally, a robust technology ecosystem will aid as an enabler for industry wide data platforms and help in building strong digital reach and delivery mechanisms.