Role of CMAs in the Indian Insurance Industry

Abstract

Over the past few years most of the sectors have been working towards only one objective i.e. survival against stiff competition. Worldwide, the financial services sector was one of the hardest hit due to economic upheaval. Insurance companies emerged stronger from the downturn by capitalizing on market opportunities to extend their market reach, enhancing their product range and taking market share away from their competitors.

In India, when the insurance sector was opened up for private participation, insurance penetration was quite low. Companies reaped the benefit of this under penetration and reported high growth rates. Times have changed now and the ride going forward is unlikely to be smooth. Insurance companies need to focus on their distribution efficiency, customer retention strategy, operational discipline, regulatory developments and opportunities for innovation to drive sustainable growth and profitability.

The insurance industry is facing an extraordinary confluence of adverse macroeconomic trends, along with unique regulatory challenges. As balance sheets weaken, revenue growth slows down and margins come under pressure, the urgency for CMAs to reduce costs, strengthen a company's risk management functions and stabilize their capital position increases. In addition, CMA's are under growing pressure from analysts and investors to implement changes that will improve the long term operational efficiency of their organization.

This article also brings about the need for efficiency and cost management to be undertaken by CMAs. It addresses how insurance companies can adjust their perspectives as they contemplate cost reduction. Focusing on cost reduction, in good times and bad, enables companies to strengthen their operating performance and generate the momentum to capitalize on new opportunities.