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Insurance sector likely to decline by 10 percent
By siliconindia
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Monday, 16 February 2009, 19:14 IST
Mumbai: After consistent growth for the last seven years, insurance sector in India is expected to decline by 10 percent this year. The sector was able to maintain 35 percent annual growth rate for the past seven years, opined Shikha Sharma, Managing Director and CEO, ICICI Prudential Life Insurance.
Taking the upside of the downturn, Shikha said that hyper growth leads to inefficiency and an environment with high growth means attrition goes up and you have to spend time and money retaining people and therefore at ICICI Prudential Life, the task for the next 18 months is clear.
"Now is the time to remove waste, make organizational moves to bring in more efficiency and re-strengthen the company. The only way forward is to have the right mix of clear strategy and good people. One should believe there's going to be a market 18 months down the line and work towards it," Shikha mentioned.
For tackling the downturn, ICICI Prudential Life is looking to increase the investments this year. "One needs to stay invested in people and this is the right time to accelerate investments, especially in rural areas and health insurance," Shikha added.
On financing, Shikha pointed out that liquidity has dried up post-October, and in spite of interest rates being cut, people are still waiting and watching. According to Shikha, only when people get comfortable with the liquidity situation will they become comfortable with locking in money for long-term savings. Shikha also expects that the government would provide further tax incentives for long-term savings.