In 2011-12, the insurance segment had contracted two per cent.
In the April-July period, the sector grew 17 per cent, compared to the year-ago period. However, growth for the entire financial year might not be at such high levels, he said.
“One should look at life insurance as one of the various instruments of savings. If savings are constrained, either because of inflation or because of other methods, insurance would obviously suffer,” he told reporters, adding amendments to the Income Tax Act would have a negative impact on insurance.
On the finance ministry’s focus on accelerating growth in the insurance sector, Narayan said the ministry had constituted industry panels nine months earlier and these had suggested various steps in this regard. Early this month, Finance Minister P Chidambaram had met members of these panels. Narayan said another such meeting would be held.
Striking a balance between the interests of policyholders and those of insurance companies was what Irda was striving for, he said. However, currently, insurance companies felt the regulator favoured policyholders, he added.
On increasing the investment exposure cap from 10 per cent, he said in terms of feasibility, this was beyond the regulator’s preview of the Insurance Act. He added it was possible to enhance the exposure limit only if suitable amendments were made in the Act. Stability and prudence were vital he said, adding in pension and insurance funds, large equity exposure was fundamentally flawed and risky.