Private Life Insurers Seen A Fall Of 20%
Asia-Pacific holds immense opportunities for insurers looking for growth, as many markets in the region have enlarged mainly because of the growing number of customers that looking to obtain insurance. Some challenges, of course, remain. What currently hinder the European insurance industry from achieving higher growth are the low interest rates and the poor development of the economy. 2012 has shown low GDP growth, average performance of the equity market and low rate of interest. Hence the market scenario has not been very good. To establish better performance the insurers have to quickly adapt to the ever changing accounting and regulatory environments, create new markets, enable the distribution system to be more flexible and enhance the management of capital structure. Overall the global market for insurance has performed well in spite of the financial crisis. Even though the interest rates have been quite low and have resulted in poor returns of investments, yet the demand for both insurance services as well as products have been quite high.
The future of this industry has various hurdles and challenges. Usually when the rate of interest is low on a continuous basis, countries tend to find it risky. This is mostly true for companies that have contracts that offer contractual rates guaranteed, given the possible gap between guaranteed return rates and income on interest.
The possibility of sovereign risk default or the possibility of severe downgrade of a nation is a major hurdle n the insurance sector. This holds especially true for those companies that have direct exposure to government debt or indirect exposure from other asset classes which includes bank issued bonds.
The losses that have accumulated from normal catastrophes bring to light the central role of the reinsurers on how a risk has been managed n cases of large scale catastrophes.
Based on the latest resulted shown by the Insurance Regulatory and enlargement power that overall new business premium collected by the life insurance industry has been nearly Rs 900 billion from the month of April 2011 to February 2012. This has created a 13% decline. The new business premiums collected by private life insurers has seen a fall of nearly 20%. This has resulted in the fall of market share of the private players to fall to 33% from April 2011 to February 2012.