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India Insurance Report Q3 2012 - New Market Report Now Available

Recently published research from Business Monitor International, "India Insurance Report Q3 2012", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 08/15/2012 -- Key Insights And Key Risks

The India Insurance Report considers the prospects for both life and non-life insurers in the country. As of mid-2012, the latest developments indicate that life insurers continue to deal with the clampdown on the selling of unit-linked insurance plans (ULIPs) by the Insurance Regulatory and Development Authority (IRDA) - notwithstanding that the regulator has eased the rules slightly. In part because of the move against the sales of ULIPs, partly because of more general uncertainty over the regulator's view in relation to single-premium products and partly due to an exodus of agents from the industry, new business premiums shrunk in the year ending March 2012 (which is identified as 2011 in the tables in this report). Nevertheless, overall life premiums appear likely to have risen at high single-digit rates.

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Most of the wildcards for the life segment over the longer term are positive. It remains to be seen, for instance, whether the regulator will allow life insurance companies to distribute their products through the (currently) tied agency network of Life Insurance Corporation of India (LIC): the state-owned giant that accounts for about three-quarters of all premiums written in the segment. Reports also suggest IRDA is looking at ways to promote paperless record keeping - which should be good for the insurance companies and, probably, their customers. In early 2012, IRDA published a report that highlighted that it understands what the challenges that need to be overcome are if micro-insurance is to flourish in India.

As of mid-2012, the latest news from the non-life segment indicates that premiums continue to grow rapidly. Indeed, the trend of the last three years or so, in which non-life penetration has been falling (if gradually) appears to have come to an end. It seems that the non-life companies have been able to pass onto their customers the higher costs incurred in non-motor related lines (such as higher reinsurance premiums, for instance). Within motor-related lines, the wildcard is the possible abolition of the pool from which compulsory motorists' third-party liability (CMTPL) claims are paid. This could lead to an effective liberalisation of this important part of the non-life segment and an improvement in profitability. However, it is not clear the extent to which the non-life companies would be able to lift rates and premiums for motor-related insurance.

Over the last quarter, BMI has made the following changes:

- We recognise the latest regulatory changes, including the probability that IRDA will not move against single-premium insurance products.
- The analysis includes the latest figures published by IRDA in relation to much of the fiscal year through to March 2012 and considers the comments of some of the insurers themselves in relation to conditions in the sector in early 2012.

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