MUMBAI: Improving demographic drivers and supporting regulatory environment is likely to result in faster growth of premium income of insurance industry during FY14-18 as against in the last five fiscals, according to Care Ratings.
"Indian insurance industry premium income to grow during the period FY14-18 at a much faster pace as compared to FY09-13 on account of improving structural and demographic drivers and stable and supportive regulatory developments," the rating agency said in a research report.
The report expects the life insurance market to grow at a double-digit rate during FY14-18 as compared to higher-single digit growth rate during FY09-13.
Higher demand for retirement products, growing awareness, education in middle-income class group and sustained growth in urbanisation rate would lead to growth in life insurance industry, the report said
The report said the growth in non-life insurance industry premium is expected to outpace the growth of life insurance industry primarily due to huge under-penetration.
"The outpace would be on account of increasing penetration and popularity of health insurance products and greater volume of transactions under segments such as fire, marine, export credit," the report said
Growing demand for motor insurance products due to expected rise in per capita, disposable income levels will also lead to faster growth in non-life industry premium.
The report suggested that industry players have to focus on raising the productivity of costs incurred towards employee training and development.
Insurance companies will have to establish effective distribution channels and undertake marketing activities to improve awareness and education level, the report said.
"The recent guidelines by IRDA and RBI enabling insurance broking by banks may help reduce operational costs of insurance companies, due to marginal incremental expenditure by insurance companies in setting up distribution chain," the report said.
The report expects regulatory changes and government initiatives to aid further penetration of insurance products in medium term.
It believes frauds, high lapse-ratio and macro-economic variances affecting the industry performance are some of the key challenges to the insurance industry.
Also Read:
Interest Rates Not To Be Raised Immediately: Banks
10 Economically Riskiest Countries
