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New Year 2018: Insurers to focus on IPOs, consolidation may be on cards too

The insurance industry is witnessing growth and is projected to have great times in the years to come

Press Trust of India  |  New Delhi 

Image: iStock
Image: iStock

More are expected to hit the capital markets next year after successful of five insurers, including two state-owned companies, which collectively raked in about Rs 45,000 crore.

Besides the spate of IPOs, 2018 will also witness some consolidation in the space although the merger of Max Life and with HDFC Standard Life could not go through.

However, there are other deals that are in the works which may fructify next year.

In the recent past, the sector has seen some consolidation and the action is expected to continue going forward, Bajaj Allianz General Company CEO Tapan Singhel told PTI.

The is witnessing growth and is projected to have great times in the years to come. This offers immense scope for consolidation as some promoters may look at exiting non-core businesses and existing large desire to achieve scale and bring in better synergies to pass on the cost efficiencies to customers and shareholders, he said.

With regard to fundraising, ICICI Lombard was the first to hit the capital market this year and raised Rs 5,700 crore from the primary market.

Incidentally, the IPO chart in this fiscal was topped by firm GIC Re that garnered over Rs 11,176 crore.

This was the largest public float by any firm after the October 2010 offer by which raised Rs 15,000 crore.

GIC is followed by New India Assurance Company that raised Rs 9,467 crore, HDFC Standard Life Company (Rs 8,695 crore), SBI Life Company (Rs 8,386 crore) and (Rs 5,700 crore).

Going forward, other state-owned general -- National Company, Oriental Co and United India Co -- are gearing up for listing.

The year also witnessed the entry of new players like Acko General Company, DHFL General Insurance, Edelweiss General Company Limited and Go Digit General

With this, there are now 9 re-companies, 24 life and 33 general insurers, including 6 standalone health companies, in India.

The sector is growing at a rapid pace, particularly the health segment, said Health CEO

"Technology-led disruptive ideas are changing the face of business and the category per se is booming with new products being launched and the distribution network being expanded. This trend will continue and will focus on tech-driven ideas," Jacob said.

Though demonetisation and GST have disrupted the business and economic growth in the short run, the growth momentum will return after economy stabilises, he said.

"As the sector grows, new entrants would come in with new products. This will further make the market competitive," he added.

Two major developments that are expected are norms for the usage of telematics in the in determining the premium pricing; and amendments to the Motor Vehicles Act.

"We expect the Motor Vehicles Act to be passed in the coming year, which will have crucial implications on the

"We would also expect the government to consider providing tax incentives on schemes such as home to attract more Indians to avail this financial protection," Singhel said.

As far as the regulatory landscape is concerned, IRDAI issued new guidelines on outsourcing activities by by clearly defining the areas of work that should be done in- house and those which can be handed out to third-parties.

The regulator said the norms are aimed at ensuring that follow prudent practises on management of risks arising out of outsourcing so as to prevent negative systemic impact on one hand and protect the interests of the policyholders on the other.

The move will also ensure sound and responsive management practises for effective oversight and adequate due diligence while outsourcing by insurers, it added.

It also proposed changes in the 16-year old regulations regarding Appointed Actuaries by modifying the framework for their appointment and functions.

"Based on the experience gained, since the last amendment effected in the year 2013, the Authority felt that there is a need to amend the IRDA (Appointed Actuary), Regulations, 2000," it said.

Appointed Actuaries (AAs) are entrusted with the responsibility of maintaining solvency position of the company. There are other functions such as new product approval which need inputs and certification from Appointed Actuaries.

First Published: Sat, December 30 2017. 15:27 IST
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