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Outlook The APE of the life insurance industry had contracted significantly in the recent past, as the new ULIP guidelines set in and insurers awaited IRDA clearances on new products. Sequentially, however, the APE growth has picked up as players launched new products conforming to the revised guidelines. The revised regulations are likely to have a negative impact on the margins and growth of the insurance companies in the near term. However, these reforms are positive from a long-term perspective as the end- consumer stands to benefit from them.
The insurance companies will design new products based on the revised guidelines and will revamp their distribution structure to minimize the expenses. Hence, the revised guidelines should ultimately help improve the penetration of life insurance products in India. In the near term, players with strong bancassurance tie-ups will have an advantage over those primarily dependent on the agency led distribution channel.