Insurers have been grappling with a host of regulatory changes the last couple of years. Here’s a look at what lies ahead.
Regulatory changes, volatile capital markets and decline in financial savings have impacted the performance of private life insurers in the last five years. In 2010, the focus of the insurers was on first year premium growth and market share gains. However, post the regulatory changes in product structures, particularly ULIPs, companies have been focussing on cost rationalisation. The operating expenses as a percentage of total premium have been trending lower in the last four years.
Looking ahead, increase in financial savings and low insurance penetration vis-à-vis other countries should drive growth. Coming out of the regulatory overhang, players are looking at a more balanced product portfolio. Life insurance policies are broadly categorised into traditional and ULIPs. Within traditional policies, life insurers sell participating (bonuses declared at the discretion of the insurer) and non-participating policies (bonuses clearly defined; pegged to an index).