Mumbai: The domestic life insurance industry is expected to continue to grow at 14-15 per cent, however frauds, high lapse-ratio, any unfavourable changes in macro-economic factors such as trade breakdown, unemployment and uncertainties in the regulatory landscape could pose challenges said Care Ratings in a report.
Factors such as higher demand for retirement products such as pension/annuity coming from rapidly aging population coupled with low availability of government sponsored social security mechanisms, rising financial literacy levels in the middle income class, product innovations, rapid urbanisation and regulatory changes, would aid in the further penetration of insurance products in medium term.
However, challenges such as 1) low income of individual agents, and 2) low persistency ratio continue to persist in the segment. These challenges would need to be addressed to improve the depth and spread of the industry said Care Ratings.
Insurance demand is positively correlated with economic growth.
