With increasing competition, the fast-growing insurance industry may witness a consolidation among smaller players, and see the emergence of some big companies, a report said.

The insurance regulator, IRDA, is in the process of finalising guidelines for mergers and acquisitions in the insurance space, the report on insurance growth prospects, prepared by the Confederation of Indian Industry (CII) and Ernst & Young, said here today.

As the insurance industry is maturing, it will focus on stabilisation in the next few years. The rapid growth in the last 10 years is not sustainable, it said.

The Government, regulator and insurance companies are now focussed on maintaining a conducive environment for sustainable growth, higher contribution of the industry to the economic development and increasing reach of insurance to the under-developed areas of the country, it said.

With private players completing nearly 10 years of existence, the sector is looking at new ways to meet capital requirement. The Government is considering raising the upper limit in FDI to 49 percent from 26 percent, it said.