The mutual fund industry may have got what they wanted to get into the growth zone but the insurance industry is still waiting for the solutions to come their way. Amitabh Chaudhry, MD & CEO HDFC Life told Sandeep Singh about de-growth in the insurance sector and impact of quick
regulatory changes. Excerpts:
Are you seeing growth coming back in to the sector?
Things continue to be the same and insurance industry continues to suffer, especially the private sector. People said, last year there was de-growth and this year should be better but the first quarter numbers show that private sector has de-grown further 3 per cent. I am not talking about total premium but new business growth and in that individual weighted received premium. When you look at top ten private companies, 7 have de-grown. Even in the renewal premium, almost everyone has de-grown. LIC, however, has done quite well and as all the changes that have been brought in by the regulator are playing more to the strength of the incumbent, a shift to traditional and smaller size policies.
The regulator has said in the past that growth has been impacted by macro-economic factors. What do you say?
I accept that macroeconomic factors have played a role as factors like high interest rates, markets not doing well, five year lock-in, real estate and gold doing well, but to say that regulations have not played a role would be unfair. I cannot argue on the changes that regulator has brought in, what I will argue with is the pace and rapidity of changes that has caused uncertainty.
How is the regulation impacting the industry?
There is a lot of uncertainty all around about changes in ‘par’ policies, level of protection, new definition of ‘non-par’, concept of index linked products. So, how do I plan as I don't know when these guidelines will get implemented, how much will the transition time be and even if I file, how much time it will take to get approved.
But the regulator's move is a result of industry practices.
The regulator has stated that we need to follow the rules and to see that we are selling the right products and we understand and appreciate that. One cannot argue with the regulators intent on all the things being done on product front as in the long-term they seem to be the right things. The steps are driven by things they have