By Venkatachari Jagannathan 

Chennai, Dec 17 (IANS): The passage of the insurance bill to give more power to the watchdog and permit 49 percent foreign equity was 2015's highlight for the $60-billion industry in India that can help in expanding the reach of this crucial social security beyond the current 3.8 percent.

"I would look at 2015 as a year of change and optimism," said G. Srinivasan, chairman-cum-managing director, New India Assurance Company.

"The passage of the Insurance Laws (Amendment) Act has brought in a lot of changes like the FDI (foreign direct investment) cap going up, foreign re-insurers being allowed to set up branches and a number of regulatory changes being ushered in," Srinivasan told IANS.

"It has also been a busy year for the industry. There have been several regulatory changes that will have a lasting impact on how the industry develops from here on," added Anup Rau, chief executive and executive director, Reliance Life Insurance Company.

Experts also said from a regulatory standpoint, 2015 would count as a turning point for Indian insurance -- which is expected to quadruple in size from $60 billion now over the next 10 years, with a $160-billion market for the life segment.

"There have been quite a few regulatory changes either already brought in after amending the insurance law or likely to be introduced shortly," said Srinivasan, pointing towards areas such as changes in the norms for expense management, solvency, investment and reinsurance.

The insurance industry, and more particularly the life insurance sector, expects the corporate agency regulations to allow banks to work with multiple insurers to provide access and choice to the majority of the population.

Though the amended insurance law allows FDI of up to 49 percent, announcements on stake hikes by foreign partners have been coming in slowly. In the life insurance sector, there have been a couple of announcements while in the non-life sector not much is being heard on the topic.

Nippon Life has already signed definitive documents to increase its stake in Reliance Life to 49 percent; so have Tokio Marine, Axa, AIA Life, Aegon and Sun Life in their respective joint ventures.

In the non-life side, Bupa has announced its decision to hike its stake to 49 percent in its Indian health insurance joint venture.

"There are several modalities that need to be worked out before any stake increase discussion can be concluded. The situation cannot be generalised to say that the foreign partners are not keen to increase their holdings," Rau said.

Yet, Srinivasan expects many foreign partners to hike their stakes in their Indian ventures over the next few months as the issues on Indian management and control and valuation of the companies are fairly settled now.

Speaking about the market trend, New India's Srinivasan said the commercial segment has grown lower while retail has continued to drive the sector's growth. This trend is the same for the industry.

According to Rau, for the life insurers, unit linked insurance policy (ULIP) is the flavour of the year. The private life insurers are logging around 16 percent growth this fiscal, primarily driven by growth of bank promoted insurers and ULIP sales.

Rau said evaluating the distributor remuneration is one the major areas to be looked into by the regulator. The were some misses as well. Rau cited as the major one the inability to get the individual agency back to the growth path.

The insurance law, post amendment, also allowed for appeal against the regulator's orders.

Now as the insurance business rides on the growth path, the next sector that is expected to get the industry's attention is the pension sector. This industry, too, is seeing some action. The foreign equity norms for the insurance industry also, by default, applies to this sector.

All states, barring Tripura and West Bengal, have all notified their National Pension System, with registered subscribers.

Highlights of the year:

* FDI limits raised to 49 percent in insurance and pension sectors

* Insurance companies to be under Indian management and control

* Life insurance claims cannot be repudiated three years after inception

* Nuclear insurance pool with a corpus of Rs.1,500 crore ($224 million) set up to cover the risk of public liability

* Securities Appellate Tribunal (SAT) for appeals against insurance regulator's orders

* SBI Life Insurance Company is first insurance company to approach SAT against insurance regulator's order to refund Rs.275 crore to its policyholders

* Host of companies in life insurance line up to hike stakes in Indian ventures.