Insurance firm valuations remain an enigma: CII-Towers Watson study

Even though the upper limit of foreign direct investment (FDI) in insurance has been raised to 49 per cent, the valuation of insurance companies is still a novelty for investment analysts in India, according to a joint study by the Confederation of Indian Industry (CII) and Towers Watson.

According to the study, ‘Indian Insurance Sector: In Pursuit of Value’, the sector faces challenges such as regulatory changes, growing competition, mis-selling and a prolonged economic slowdown, necessitating insurers to constantly reassess their business strategies.

It noted insurers remain upbeat about the sector’s prospects and seek growth, momentum and value.

Sanjiv Bajaj, chairman, CII National Committee on Insurance and Pensions and managing director, Bajaj Finserv, said the government has created a conducive environment for the sector to unlock value through FDI.

Vivek Jalan, director (risk consulting) at Towers Watson India, added how efficiently insurers are able to utilise the expected capital infusion from foreign partners will decide the growth of the sector.