Government, industry to prepare road map boosting general insurance

NEW DELHI: The government along with the industry will prepare a road map for improving penetration of the general insurance in the country which is less than one per cent, a senior official said.

"Our (general insurance) penetration rate is low. It is 0.7 per cent. How do we improve it to average standard which is 1.5 to 4 per cent? The road map is to be prepared by all of us", Financial Services Secretary D K Mittal said.

He was speaking to reporters after meeting of the representatives of the general insurance industry with Finance Minister P Chidambaram.

The basic agenda of today's meeting, he said, was to work out ways to increase penetration of non-life insurance and promote financial inclusion.

There was a general feeling that a lot needed to be done to promote non-life insurance sector in the country, Bharti AXA General Insurance CEO Amarnath Ananthanarayanan said after the meeting.

Among other things, he said, low profitability was also hampering growth of general insurance business in the country.

"...things hindering the growth of insurance sector is lack of profitability among the general insurance companies", he said, adding the government would also need to pursue legislative changes which are awaiting Parliamentary approval.

The government's decision to raise foreign investment in insurance companies from 26 to 49 per cent cannot be implemented without amendment to the Insurance Act. The amendment bill has been pending in Parliament since December 2008.

Chidambaram had earlier in the month held similar exercise with the representatives of the life insurance industry with a view to boosting the sector.

The premium underwritten by the general insurance sector during April-July 2012-13 rose by 18.69 per cent to Rs 22,162 crore as compared to the same period of last fiscal.