India’s insurance stocks have fallen about 20% this year even as the industry continues to expand, putting the sector at the centre of a debate over valuations, regulation and future growth. The proposed changes to commissions and distribution by the Insurance Regulatory and Development Authority of India (IRDAI) have added to investor uncertainty, raising concerns over the economics of insurers, agents and digital platforms.
But Anil Ghelani, executive director and head of passives and product at DSP Mutual Fund, sees no structural deterioration in the business model. With insurance density still low and valuations under pressure, he believes the sector could be emerging as a contrarian opportunity for long-term investors. Edited excerpts from a chat:
