Coupled with the fact that large sections of society remain underpenetrated by insurance, the right product-price process proposition delivery is sure to provide an overwhelming boost to the sector, the report said.
"With the government increasing the FDI limit to 49 per cent, there is a keen sense of anticipation within the Indian insurance industry that is expecting a flush of foreign investment in the sector.
Commenting on the report, Sanjiv Bajaj, Chairman, CII National Committee on Insurance and Pensions and MD, Bajaj Finserv Ltd said: "The government has done a commendable job with FDI in creating a conducive environment for the sector to realise its full potential and unlock value.
"It is now critical for all the stakeholders, led by the insurance companies, to make a concerted effort in building a value creating and value delivering industry, thus staking claim to its rightful position among the most promising insurance markets in the world".
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The report identifies four key drivers to help realise the potential of the insurance sector, including business optimization to remedy high expenses and poor persistency that has plagued the sector; right product-price-process proposition; favourable macroeconomic fundamentals; and confidence building to regain customer confidence.
Vivek Jalan, Director, Risk Consulting, Towers Watson India said: "With all the corrective measures and regulatory changes in the past, the Indian insurance industry is poised for positive growth.
Highlighting the long-term nature of the insurance business, the report argues that to achieve the desired optimisation it is critical to set the right key performance indicators (KPIs) to ensure management focus remains on long term value drivers rather than achieving short-term goals.
Moreover, distribution appears to have posed maximum challenges for the insurance sector in the recent past, yet continues to be seen as the major driver of value in future. The inability to balance growth with profits was cited as another key challenges faced by non-life companies.