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Mitsui Sumitomo is taking 26% stake in Max New York Life Insurance Company Ltd for around Rs 2,731 crore. This makes the value of the Indian insurance venture at Rs 10,506 crore. Indian law restricts foreign investment in insurance companies to 26 percent. New York Life Insurance, the current foreign shareholder has completely exited from the JV. A year back, Reliance Capital, an Anil Ambani group company divested 26% stake in Reliance Life Insurance to Nippon Life Insurance for Rs 3,062 crore, valuing the company at Rs 11,500 crore.

New IRDA norms on motor insurance to implement 'declined risk pool system' for third party motor insurance is likely to reduce the losses incurred in this space. According to IRDA, the insurance companies would now need to retain 20 percent of the gross premium in their accounts, give 10 percent to General Insurance Corporation of India and rest 70 percent would go to the motor pool. The size of the pool is likely to shrink to a quarter because of the comprehensive policy going out of the ambit of the pool. At present, the pool corpus is Rs 4,000 crore. It is expected to come down to Rs1,000 crore from the next financial year when the pool gets effective.

The Life Insurance sector recorded good growth during the years 2006 and 2007 riding over the growth of Ulip products. The manufacturers achieved high top line growth. The intermediaries also got rewarded. But many customers did not understand the product features properly and as a result, when the market faced downturn, they have suffered. IRDA has responded with consumer centric intervention during 2010 which aimed at restoring the trust of the consumers.

All the distribution channels i.e Individual Agency, Bancassurance, Brokers and Direct marketing sell almost similar products. But the degree of selling skill sets, understanding of products and availability of time for the customers across channels vary. The rising income levels and demographic shifts have led to emergence of distinctive consumer segments that need to be served fundamentally in different ways.

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