Insurance sector could grow 17 pct this FY - IRDA

NEW DELHI (Reuters) - India's insurance sector, so far unaffected by the global financial crisis, will grow 17 percent in 2008/09 if the economy continues to expand at the pace it did in the September quarter, the regulator said on Wednesday.

Asia's third-largest economy expanded 7.6 percent in the July-September period, but economists expect growth to slow to about 7 percent in the year to March, below the nearly 9 percent seen in the last four years.

"Our projections are: if GDP grows at 7.6 percent, premiums would grow at 17 percent," J. Hari Narayan, head of the Insurance Regulatory and Development Authority told an industry meet.

India, a traditionally under-insured country, is an attractive market, given its large, young population with rising disposable incomes. It has 21 life and 20 general insurers, some of which are units of global insurance majors.

Life insurers, who make up the bulk of the market, grew their business by 23.3 percent to 930 billion rupees in 2007/08, while general insurers posted growth of about 14 percent in premium income to 298 billion rupees, according to IRDA data.

The government has proposed to hike the limit on foreign direct investment in the sector to 49 percent from 26 percent currently, but has said it is unlikely these reforms would be approved by Parliament this year due to time constraints.

A strong regulatory framework and healthy solvency requirements at Indian insurance firms would help them withstand the "strains and shocks" of the financial crisis, he said.

"At the moment all the insurance companies in India, their solvency margins exceeds the minimum prescribed. That is very healthy," said Narayan.