Managing sales and distribution is the biggest challenge for Indian insurers, while globally it is strong investment performance, consultancy firm PricewaterhouseCoopers has said in a latest survey.
The key concerns of the Indian insurance industry are different from those globally, where insurers are more concerned about the ability to put in strong investment performance amid an ongoing financial downturn, it said.
PwC's Insurance Banana Skins survey, conducted across 39 countries with over 400 responses, including India, found that retail sales practices, managing costs, equity markets, investment performance and capital availability were the top five worrying areas for insurers in the country.
The key concern in other countries is the macro-economic outlook and its impact on the insurance industry, the PwC survey said.
The survey further added that lower business volumes are expected to put a strain on profitability and capital in many parts of the world.
"The industry is now operating in the worst economic downturn seen in decades, which has led not only to a major reappraisal of key risks but also a concern that the industry is not as well placed to deal with them as it once thought and therefore a change in risk appetite," PricewaterhouseCoopers global insurance leader Ian Dilks said.
However, Indian respondents showed that they were less concerned over the impact of the financial crisis on their business than the rest of the world.
"The striking contrast in the responses received from Indian insurers clearly indicate the efficacy of regulatory and management controls over investment activity in India," PwC's India leader for insurance Anish P Amin observed.
Despite the different responses from India and the rest of world, the findings indicated that respondents did not think the Indian market would escape from the impact of downturn.
Many respondents expected to face pressure on their profitability and solvency and hence showed the highest concern of any country group with cost management, it further noted.
Interestingly, this year's results are in sharp contrast to the previous survey in 2007, when the top focus was on operational risks such as too much regulation.
Meanwhile, the global survey also revealed that the insurance industry is seen to be less well prepared in handling risks than it was in 2007.
Only four per cent of respondents thought that insurance companies were well prepared compared with 21 per cent last time.
Reply from India was more negative, with no respondents believing that the industry was well prepared, against a global response of four per cent.
The PwC survey finds that insurance executives are also worried that the industry would have to bear the brunt of the banking crisis.
For the life insurance industry, the downturn is likely to hit the savings business, particularly if there is an extended period of low interest rates.
On the non-life insurance side, the main concerns are with the outlook for premiums, and a possible surge in claims, including those motivated by fraud, the study added.
