The passage of the insurance bill by parliament allowing increase in foreign direct investment (FDI) to 49 percent and other provisions is expected to nearly double insurance penetration in five years time, said a top official of life insurance industry body.
"With the bill now becoming a law, more number of players would enter the Indian market. Already 10 life insurers from different parts of the world like South Korea and the US have shown interest to come in," V.Manickam, secretary general, Life Insurance Council told IANS.
He said when there are more players, there will be more foot soldiers selling the policies and hence more people will be enthused to buy a life insurance policy.
India's uninsured population is around 50 crore.
"Currently the life insurance penetration is only 3.9 percent. We expect this to go to six percent in five years time. We are projecting the life insurance sector to grow by 15 percent per annum," Manickam said.
"With this move, we expect the sector to receive fresh capital infusion of around Rs.50,000 crore by 2020. The number of life insurance branch offices will go up from 10,000 to 30,000. The number of employees will go up to around 500,000 from the current 200,000," he said.
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Manickam said that the number of agents selling life insurance policies will go up to four million from the present levels of around two million.
Along with the growth of the life insurance sector, the household savings would also grow 40 percent from the current 30 percent, he added.
The new law is more policyholder friendly and life insurers will not be able to repudiate claims /policies, three years after the date of issuance of the life insurance policy/ reinstatement of a lapsed policy on the grounds of misstatements in application forms.
It recognises family members as "beneficiary nominees" and partial assignments in insurance policies.
"Mis-selling by agents will come down as the law provides for huge penalties for insurers. Further from April onwards appointment of agents will be by the companies and the onus on them is more now," Manickam said.
India opened up the insurance sector for private players in 2000, setting the cap on FDI at 26 percent.
According to sector regulator IRDA, there are 53 insurers (24 life, 28 non-life and one reinsurer) in India.