More efficient distribution as well as deployment of additional capital inflows from foreign partners is key to the growth of India's insurance industry, recommended a report on Sunday.
The Confederation of Indian Industry-Ernst & Young (EY) report on the insurance industry titled 'Building Growth, Building Value' recommends chasing efficiency in distribution by finding greater synergy among the different channels, the CII said in a release here.
"The report also states that insurers must be careful in identifying the right ways to employ additional capital inflows that they may receive over the next few years with capital infusion from the foreign partner," it said.
With the passage of the Insurance Laws (Amendment) Act 2015, the longtime demand of having greater access to foreign capital has been fulfilled, said the industry chamber.
"This one amendment can be a game changer as it will bring in significant fresh capital to re-energise the sector," said the report.
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"However, insurance companies must tread with caution and carefully adopt changes to make the best possible use of the opportunities presented," it added.
Terming cyber-security a key risk area for insurance, the report recommended insurers adopt a resilient cyber-security framework.
Companies maintain information systems for core processes like sales management, policy administration and claims management, which make them prime targets for cyber-attacks.
To improve information security, insurance companies need to develop a strong risk management and governance framework by implementing enterprise-wide security programmes that address processes and controls, privacy and data protection, the report said.
It said major gaps which the insurance industry must address are around realising a cost-effective distribution mix, primarily in life insurance, checking the ongoing slowdown in the non-life sector, getting a grip on claims, and the absence of a sizeable presence in the pension space.
Some of the focus areas identified in the report include chasing efficiency in distribution by finding synergy among channels, driving skill development at an industry level, optimising the distribution network and achieving greater service integration between the insurer and the distributor.
The report also recommends exploring possibilities in the pension sector by developing relevant products and incentivising stakeholders, along with penetration in the health insurance segment by engaging customers early, creating cost effective offerings and checking fraud.
