The insurance industry, which is already facing a cash crunch, could register a growth of below 5% in the current fiscal year, a survey by the Confederation of Indian Industry (CII) has found.
50% of life insurance majors surveyed projected their growth to be negative in the current fiscal year. However the study revealed that the non-life insurance companies were more optimistic in their growth outlook with nearly 60% of them projecting an average growth of more than 10%.
The survey comes at a time when the government is looking to pass the pending insurance bill seeking to increase the foreign direct investment (FDI) level to 49% from the current 26%.
“While the Indian insurance industry is acknowledged globally to have matured tremendously since the opening up of the sector in 2001, a facilitative and enabling regulatory and policy environment is critical to ensure that insurance companies in India enter the next stage of growth and evolution on the foundation of greater insurance density and penetration,” said Chandrajit Banerjee, director-general, CII.
At present, the penetration level in the life insurance sector is 4.4% and 0.76% in the non-life segment. Earlier finance minister P Chidambaram had said the immediate capital requirement of the sector is $5-6 billion to expand operations and increase penetration.