Institutional risks such as business practices and quality of risk management are among the top risks that the Indian insurance industry at present faces, says consultancy firm PwC.
According to a biennial survey of insurance risks conducted by CSFI (Centre for the Study of Financial Innovation) and PwC, besides, business practices and quality of risk management, other major risks are -- regulation, natural catastrophes and quality of management.
"Long driven focus on top line puts 'Quality of Management' and 'Business Practices' as two of the top five risk factors in India," PwC India leader financial services Manoj K Kashyap said.
Kashyap further said: "Business Practices has seen a striking rise in the global survey from rank 18 to rank 4, reflecting slippages in business standards during a hard market."
As per the survey, product development was ranked as the sixth major risk for the Indian insurance industry, followed by reputation (7th), innovation (8th), investment performance (9th) and corporate governance (10th).
Meanwhile, on the question of how well Indian insurers are prepared to handle the risks identified, India scored at 2.73, below the global average of 2.95.
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In India, over-regulation and under-writing risks are serious matters of discussion, while, lower-rated concerns included the risk around long-term liabilities and actuarial assumptions, which were seen by some respondents as quite conservative in India.
Globally, the survey identified "regulation" as the top risk concern for insurers, underlining the continuing uncertainty surrounding major regulatory initiatives.
The survey further said there is excess capital in the industry, particularly on the non-life and reinsurance sides, which is keeping prices soft and hurting profitability.
Another receding risk, at least in developed markets, is human resources: the shake-out in the financial services sector has made it easier to recruit and keep good talent. The situation is harder in emerging markets where qualified talent remains in short supply in many markets, PwC said.
The global survey polled over 650 insurance practitioners and industry observers in 54 countries to find out where they saw the greatest risks over the next 2-3 years.