To grow, Indian insurance companies need IPOs

The insurance industry in India is conceivable long as the banking industry does, but has seen a change in the rules of business expansion and disclosure over the past 10-15 years. Insurance Regulatory and Development Authority of India (Irdai), which was established in 2000, opened the insurance industry to private companies that allow Indian companies to work in partnership with foreign institutions. This has redefined the insurance industry, allowing ordinary people to have adequate financial coverage at a reasonable cost. A developed and evolved insurance sector is a catalyst for the economic development of a country. It provides long-term funding for various development activities while strengthening the country’s ability to take risks.

A robust IPO insurance pipeline

This year is a year for the insurance industry in India, it is expected that a number of Initial Public Offerings (IPOs) are being carried out by large insurance companies with at least 5-6 in the advanced stages to hit the bags The decision to relax the rules of the Irdai capital increase last August (which allows insurance companies over 10 years to be made public), has pushed many companies to exploit the capital markets in India. Industry estimates suggest that insurance companies watch a mop of Rs30,000-35,000 crore this fiscal year. Cabinet Union also approved the public list of five state-owned general insurance companies, and reduced government participation to 75% 100%. The current strength of Indian stock markets, which are trading at record levels, should also support these public policy issues.

The Indian insurance sector consists of 57 companies, including 24 life insurance, 31 general insurance and 2 reinsurers. Ironically, there are only three ads on scholarships. However, public sector insurance companies have seen tremendous momentum this year, with growth potential in the industry and acceptability among institutional and retail investors. This means more traction in the area on the front IPO. The quote is also a step towards improving disclosure standards and their frequency, which will make companies respond to investors and society in general. Until a decade ago, there was little transparency in terms of political details, demands and surrender rates. The insurance regulator changed the image by introducing more disclosures.

Enhanced Insurer Liability

The Indian economy is giving new impetus to the interests of international investors, leaving constructive circumstances for attracting IPOs in the insurance sector. A public list essentially changes the legal and economic structure of a company. Management becomes more accountable to a new group of shareholders, unlike the concentrated ownership of a private company. Information on the company’s financial health and operations, which has been kept confidential, is made public. This reflects the company’s performance in many areas including growth, innovation, fraud management, customer service and regulatory compliance.

The IPO channel is mainly taken by companies to raise capital to expand activities, increase liquidity for shareholders, enhance the brand image and create valuable currency reserves that can be used for acquisitions and compensate the employees. An IPO also improves a company’s public profile by increasing its visibility and recognizing its products and services. This benefits customers gradually, that the company constantly brings better products and a better level of service to remain competent, while spreading the penetration of insurance services.

The Indian insurance IPO market is taking off at a time when the industry is about to take a big leap forward. It is expected that the insurance market in India quadruple over the next 10 years its current size of 60,000 million dollars, according to a report published by the India Brand Equity Foundation (IBEF), an initiative of the Ministry of Commerce and Industry Government of India. This is an opportunity waiting to be taken advantage of. At present, India accounts for less than 1.5% of total insurance premiums worldwide and about 2% of life insurance premiums, despite being the second most populous nation.

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