The Confederation of Indian Industry (CII) organized the 8th Insurance Summit at Hyderabad on 8th and 9th, Dec 2003 with the theme ‘Realizing the Growth Potential’. N Chandrababu Naidu, caretaker chief minister, AP, at the inaugural ceremony, said that the insurance sector is to witness a drastic change in the coming years. Indian insurance sector is growing at a rapid pace and has a lot of potential to grow further, and it will have to surpass China, where the sector is growing at a rate of 10 per cent every year. Insurance companies in India should make efforts to strengthen health insurance, and crop insurance for farmers, besides reaching the services to rural areas.

CS Rao, chairman, Insurance Regulatory & Development Authority (IRDA), said that competition in the sector is going to increase. The sector needs discipline, re-regulation and self-regulation. Indian insurance market is slowly opening up. Regulations have been framed in consultation with the willingness of the stakeholders. New channels of distribution have to be introduced in the market. Insurance agents should take up their activities more professionally. A committee at IRDA is currently reviewing remuneration to brokers. Underwriting quality has to be improved. Strategic long-term costs are going to be critical for the sector. Product innovation and channel diversification are going to take place in the industry. In the strengthening of the country’s economy, insurance sector has a key role to play.

SV Mony, chairman, CII Insurance Committee and vice chairman, AMP Sanmar Assurance, said that the consultative approach adopted by IRDA ensured that vast changes were introduced in a transparent manner. The approach has helped to open the market in an orderly and speedy way. Institutional and legislative frameworks are in place in almost all areas relating to insurance. There are 25 insurance companies operating in the Indian market and more are expected to enter into the segment.

The summit will focus on issues such as future insurance regulations, pension reforms, IT and outsourcing opportunities, alternative distribution channels and health insurance. The comprehensive amendments to the Insurance Act of 1938 are still in a draft form, and an early finalization of the amendments is needed. Pension reforms, role of existing life insurers in the pension sector, taxation of life insurance companies, future role of the tariffs in general insurance, development of a health insurance market and its support services, review of some of the regulations on the basis of what has been experienced in the last three years are the kind of issues that have to be discussed.

Faster penetration of insurance services will happen if distribution is strengthened and broadened. If banks and insurers join hands, there can be significant development. Fundamental review of remuneration system of agents is needed. Re-examination of prevalence of tariffs and prescription of commission rates is to be done.