Chemicals Pharmaceutical Textiles Preface|Foreword|Executive Summary|Banks|Non Banks|General Insurance|Life Insurance|Mutual Funds|Interview|Company Profiles|Partners|Launch Event|Editorial Team Industry Overview Structure of the Indian Banking Industry Regulatory & Policy Environment Performance of the Banking Industry Soundness Indicators of the Banking Industry Technology in Banking Issues and Challenges Development Finance Institutions Non-Banking Financial Companies Primary Dealers Industry Overview Evolution of the General Insurance Industry Performance of the Industry Industrial Segments Key Regulatory Policies Challenges and Outlook Industry Overview Evolution of the Life Insurance Industry Driving Factors Performance of the Industry Impact of the Global Financial Crisis Key Regulatory Policies Challenges and Outlook Industry Overview Evolution of the Industry Structure of the Mutual Fund Industry Regulatory Framework Current Scenario of the Mutual Fund Industry Issues & Future Outlook State Bank of India ICICI Bank Ltd Canara Bank Punjab National Bank HDFC Ltd Securities Trading Corporation of India Ltd National Bank for Agriculture & Rural Development Power Finance Corporation Ltd ICICI Prudential Asset Management Company Ldt UTI Asset Management Company Ltd Reliance Capital Asset Management Ltd HDFC Asset Management Company Ltd Life Insurance Corporation of India ICICI Prudential Life Insurance Company Ltd Bajaj Allianz Life Insurance Company Ltd SBI Life Insurance Company Ltd General Insurance Corporation of India The New India Assurance Company Ltd United India Insurance Company Ltd National Insurance Company Ltd Launch Event Launch Event - Airtel Partner

While important steps have already been taken, there are still major hurdles to overcome if the market is to realise its full potential. To begin with, further liberalisation in investment regulations on insurers to strike a proper balance between insurance solvency and investment flexibility could prove to be beneficial. Furthermore, the life insurance sectors would benefit from less invasive regulations. As far as the pricing structure goes, obsolete regulations on insurance prices should be replaced by risk-differentiated pricing structures.

Rural Market still under penetrated

With the majority of the population still residing in rural areas, the development of rural insurance will be critical in driving overall insurance market development over the longer term. There is a need to create a broader awareness about life insurance in all geographic areas in India through specific collective campaigns. This is an important precondition to developing insurance and increasing penetration. Awareness is lacking not only in rural areas, small towns and among the less educated persons. Even in urban areas, vast segments of population seem to have erroneous perception or impression which needs to be corrected.

India's Pension Market

India has a very large workforce most of whom do not have any old age security cover. Pension policy in India has always been provided through employer and employee as result of which only the organized sector has received pension coverage. However, the unorganized sector in which the majority of the population works remain uncovered. During the last seven years (FY00 to FY07) a marked shift in pension policy in India was witnessed which resulted in the introduction of a New Pension System (NPS). The NPS has been mainly designed to fill the gap of old age income security to the unorganised sector. Since its inception in Dec 22, 2003 about 100,000 Central Government employees (excluding employees of autonomous organisations) are already covered under the new pension system and contribute 10% of their salary and dearness allowance towards pension with a matching contribution from the government. There are however, still many changes that need to be introduced in India’s pension sector. Pension system in other developed countries could prove to be useful in improving the shortcomings of India’s pension sector. Private players have already tapped this market in a big way. Moreover, it will be upto the Government to take more initiatives to tap the unorganized sector.

Outlook Remains Positive

The outlook remains positive for life insurance in the medium term. As economic environment and capital markets are expected to stabilize in medium term, life insurance is projected to resume its strong performance. In India, the potential for significant market expansion in tandem with higher disposable income and a relatively young population will drive sales for both savings and protection products in the years to come. Besides, the life insurance sector needs to continue on the path of innovation by designing new products suitable for the market and make use of innovative distribution channels to reach a broader range of the population. The demand for Life insurance will be fuelled by the simultaneous growth in the per capita income of the population. As long as India continues to improve its economic fundamentals, the per capita income will increase which in turn will create demand for Life insurance products.