The latest round of reforms in the insurance industry creates the potential for further growth in the industry. It will totally transform the industry. Tomorrow's insurance industry will be a blend of opportunities and challenges.

The fast growing economies including India spent most of the year 2008 watching the financial hurricane that hit the US. Though, India was far away from the center of storm, the aftereffects of the collapsing financial structure in the US had a defining impact on the country. The International Monetary Fund (IMF) has predicted the Indian GDP growth to be in the region of 6.3% in 2009. Already, the pace of capital flow to the emerging economies has gone down.

The country is prepared for the worst. The insurance industry can be no exception. Expert's feel the pinch will be felt by the Indian insurers when they go for further capital infusion through FDI. Also the fast-paced growth experienced during the years prior to the financial meltdown will not be repeated and the Indian insurance industry should be ready to face the business glut arising out of slowdown. The penetration level in the life insurance segment has dropped for the first time from 4.1% to 4%.

Notwithstanding the financial meltdown, the Indian insurance industry is still lucrative with its huge untapped market, thanks to a large population base. The Indian insurance market is growing at a rate of 32-34% annually and it happens to be the fifth largest life insurance market in the global emerging economies and the fifth largest non-life insurance market in Asia by premium.

The total life insurance premium in India is anticipated to grow to Rs. 1,230,000 cr by 2010-11 and, the total non-life insurance premium is projected to grow at a CAGR of 25% during this period. These signs of strong growth potential provide an exciting opportunity for foreign investors. The catalyst will be the freedom going to be provided by the Government by increasing the FDI limits from 26% to 49%.

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