As the life insurance sector completes a decade post the opening up of the sector, it is going for a rethink. Life Insurance Council, the official representative body of life insurers, is busy preparing a road map for the next 10 years. Some of the broad areas being covered under the vision document for the industry include code of conduct, governance, profitability, growth, product development, distribution, penetration and innovation.
The document is being prepared by a committee comprising P Nandagopal, managing director and CEO of IndiaFirst Life Insurance, Nageshwar Rao, managing director and CEO of IDBI Federal, and Rajesh Relan, managing director and CEO of Metlife Insurance.
The committee was supposed to submit its report before the council a couple of months ago, a industry source requesting anonymity said.
Talking to FE, SB Mathur, secretary general, Life Insurance Council, said, “The industry has already completed 10 years, and hence, it is time to re-evaluate the industry.”
Though the road map was basically meant for internal consumption of the industry, we may discuss the contents of the report with the insurance regulator, Insurance Regulatory and Development Authority (Irda), Mathur added.
Recently, J Hai Narayan, chairman of Irda, had said that in the next three years insurance companies will see changes in distribution set up, marketing techniques, and channels of distribution and terms of regulatory development.
“The agency model that we see right now has serious deficiencies and that requires to be strengthened. I do not think the agency distribution model is going to last very long,” he said.
He said agency model in the traditional form has vanished in large markets across the world. “I do not see why India will be any exception to that particular development,” the Irda chief added.
He said policy holders will gradually have to pay more for motor, health and other general insurance covers as costs would go up due to companies setting aside higher funds for claim settlements.
“I think the demand and supply position in the non-life industry will be such that prices should harden and I expect to see evidence of that in the course of next few years. And I would like to make it even harder as we go along,” said Hari Narayan. He had said that the non-life insurance companies would need to bring in changes in marketing, pricing and modes of claim settlement to become profitable.
“Because of the requirement of increase in provisioning, there will be a reduction in capacity and because of that there will be a hardening of prices,” he added.
Irda has already proposed to increase provisioning requirement for insurers providing motor insurance covers.
Irda had increased the provisions made for motor pool to 153% of book value for the four years till March.
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