Remarks by Elizabeth Hogan, USAID India Deputy Director at the Launch of the Fellow Life Management Institute Program New Delhi

May 23, 2007

It is a pleasure to be here at the launch of the Indian version of the prestigious Fellow Life Management Institute (FLMI) Program. I would like to thank Birla Institute of Management and Technology (BIMTECH) and LOMA for organizing this event. I am sure today’s launch will be an important milestone in the development of India’s insurance industry. We are confident that international accreditation will improve education for insurance professionals and help to create a pool of highly qualified individuals for what is now a fast growing market in the country.

Since India’s insurance industry was opened to the private sector in 2000, rapid growth has brought new investors into the market and increased competition. India’s Insurance Regulatory and Development Authority (IRDA) licensed 24 new insurance companies during the same period. IRDA has also created a regulatory environment that helps level the playing field for all types of insurance companies irrespective of their ownership. Major international insurance companies are engaged in the Indian market with the industry attracting $400 million in foreign direct investment. And in 2006, insurance companies mobilized over $31 billion, nearly four times as much as in 1999 when investments were $8 billion. The market share of private insurance companies has risen significantly in recent years.

Other positive developments in the industry include several innovative products including rainfall insurance, group health insurance for the poor and micro-insurance. For the first time India has both stand alone health and agricultural insurance companies. Rapid growth means that the insurance industry is and will continue to be a source of high quality new jobs for the Indian economy.

Through a number of programs supported by the United States Agency for International Development, the U.S. is helping India build a world class financial system and open markets to enable the economy to grow and benefit the average Indian citizen. USAID’s bilateral Financial Institutions Reform and Expansion (FIRE) project has contributed to growth in the Indian insurance sector. Technical assistance to the IRDA and the Ministry of Finance has supported the development of a robust regulatory system and an enabling regulatory and institutional environment for health and micro-insurance. USAID also helped to develop the partnership between LOMA and Bimtech which led to the development of this course.

Development of India’s insurance market remains crucial for helping the poor overcome short-term financial crises. Insurance protects households and businesses from irrecoverable loss, like those caused by major natural disasters, illness and death. Over 90% of India’s poor population including landless laborers, women and farmers do not have any financial protection against serious illness in the family, crop failure or loss of assets due to manmade or natural disasters. India’s insurance penetration remains low - 3% of GDP verses the global average of 7%. By developing the insurance industry and making insurance more viable for the poor, it helps to avert financial disaster after a costly illness or crop failure.

Trade barriers are vanishing to keep pace with technology. With India’s insurance market headed for fierce competition, a company’s ability to gain market and consumers’ trust will depend on the quality of professionals it hires and is able to retain. India’s insurance professionals face two major challenges in the consolidation of impressive gains made by the industry since liberalization.

First, they need to constantly upgrade themselves to keep pace with the rapidly changing nature of global insurance business. Second, they need to develop innovative distribution channels and affordable products for the vast majority of the poor and underserved population, especially in rural areas. A well-designed professional development program will help the industry meet these challenges effectively.

Professional accreditation has significant benefits for clients, the market and for the professionals. It helps the industry maintain its growth by building a pool of skilled local professionals. To customers it means doing business with an intermediary who is properly qualified and trained and regulated by a self-regulatory organization. The result is increased customer confidence in the industry. Finally, it brings insurance professionals enhanced knowledge and skills enhancing their employability in a changing market place.

I am sure the Indian FLMI program will help to equip India’s insurance professionals to successfully face the challenges ahead. I congratulate LOMA and BIMTECH for developing a premier course for Indian insurance professionals. USAID is proud to be associated with this exciting initiative.

Thank you.