Money & Banking

Private sector insurers will need ‘₹36,000 cr capital over 5 years’

Our Bureau Hyderabad | Updated on October 05, 2014 Published on October 05, 2014

Hike in FDI limit, a much-needed pill for the insurance sector: Assocham

The private insurance industry needs about ₹36,000 crore capital over the next five years, according to a study commissioned by the Assocham.

Of this, about ₹25,000 crore could come in the form of FDI (foreign direct investment), the report states, and emphasises on the need to increase the existing FDI limit substantially.

A Bill to increase the FDI limit from the current 26 per cent to 49 per cent is awaiting clearance from Parliament. “This is a much-needed pill for the insurance sector. Insurers need funds to maintain healthy capital base, offer a wider bouquet of product and deepen insurance penetration,” said the study which was released last week.

The FDI might lead to more participation of foreign insurers in development of new-age channels of distribution and eventually lead to listing of some of the entities providing better valuation.

On the emerging technological advances in insurance, the study said the use of telematics, Web and social media, and risk management through analytics would have a positive impact on the industry.

The demand for insurance products would go up as the working population (25-60 years) is expected to increase from 507 million in 2011 to 631 million by 2021, it added.

Published on October 05, 2014
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