The government and industry will work together to prepare a roadmap for the general insurance sector in the country, which at present barely has 0.7 per cent penetration while the average standard stood between 1.5 and 4 per cent, a senior government said on Monday.
Speaking to reporters after meeting a delegation of representatives of the general insurance industry with Finance Minister P Chidambaram, Financial Service Secretary DK Mittal said, “Our general insurance penetration rate is low. It is 0.7 per cent. How do we improve it to average standard which is 1.5% to 4 per cent, the road map is to be prepared by all of us.”
According to Mittal, the agenda for Monday’s meeting was to find ways to increase penetration of non-life insurance and promote financial inclusion.
“There was a general feeling that a lot needed to be done to promote non-life insurance sector in the country,” Bharti Axa General Insurance CEO Amarnath Ananthanarayanan told reporters.
He also pointed out that low profitability was also hampering growth of general insurance business in the country. ...Things hindering the growth of insurance sector is lack of profitability among the general insurance companies,” he said adding the government would also need to pursue legislative changes which are awaiting parliamentary approval.
The government in its second set of reforms announced recently has decided to raise foreign direct investment in the insurance sector from 26% to 49% as it felt that funds were required for growth of the general insurance sector, however the hike in FDI in insurance sector cannot be implemented without amendments in the Insurance Act. The amendment bill is pending in Parliament since December 2008.
Earlier in the month, the Finance Minister had held a similar exercise with the senior officials of the life insurance industry with an aim to lend a fillip to the sector.