According to the study, most large insurance players are expected to decelerate the pace of distribution growth and increase their focus on the retention of channel partners and improve channel productivity.
India is fast emerging as one of the world's most dynamic insurance markets with significant untapped potential, it says. The study shows that during the third phase the role of the insurance regulator -- the Insurance Regulatory and Development Authority (IRDA) - will become more critical and it is in the finalisation stage of its regulations, which would be instrumental in navigating the future course of the insurance industry.
IRDA has introduced certain regulations to help improve disclosures, profitability and capital as well as to ensure consumer protection. Further, the regulator is amid finalising the norms for the initial public offer (IPO) of insurance companies.
According to the study, there are large untapped areas which have not yet benefitted from the upside of insurance. Imparting financial literacy, incentivising Indian households to transfer savings from physical assets to financial assets and taking the distribution network to rural areas are expected to help bring more and more individuals within the insurance ambit.
While insurance penetration in India is higher than that in countries such as China and Brazil, it still has a long way to go. India's growing consumer class, rising insurance awareness and increasing domestic savings and investments are among the most critical factors that have positively driven the market penetration of the insurance products among its consumer segments.
Risk management also plays a very critical role in the insurance business. The study also says that with the rising competition, the industry might also witness consolidation among smaller players and emergence of some large players.
The regulator is in the process of finalising guidelines for mergers and acquisitions in the insurance space in India.