Insurance

D2C Admin

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Life insurance industry in the country is expected to grow 12-15% annually over the next three to five years. The insurance industry in India is expected to reach US$ 280 billion by 2020. At 3.69%, India ranked 41 in 2017 in terms of insurance penetration, with life insurance penetration at 2.76% and non-life insurance penetration at 0.93%.

Crop insurance segment contributed 21.6% to gross direct premiums of non-life insurance companies in FY20. Over 53.8 million farmers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in FY20

Competitive Advantage for India

India’s robust economy is expected to sustain the growth in insurance premiums written

Government Policies:

As per Union Budget 2019-20, 100% foreign direct investment (FDI) was permitted for insurance intermediaries
Reduction in Net Owned Fund requirement from INR 5,000 crore to INR 1,000 crore proposed to facilitate on-shoring of international transactions
Clarity on rules for insurance IPOs would infuse liquidity in the industry
National Health Protection Scheme will be launched under Ayushman Bharat, as per Union Budget 2018-19

Investments:

Insurance companies raised more than US$ 6 billion from public issues in 2017
Fund of Rs 6,400 crore (US$ 887 million) has been allocated for 2020-21

Market overview

IRDAI governs the sector. The types of insurance players are: Life insurance, General insurance, Specialized insurers, Standalone Health Insurance, Re-insurance & Foreign insurers branches
The market share of private sector companies in the non-life insurance market rose from 15% in FY04 to almost 56% in FY21
In life insurance segment, private players had a market share of 31.3% in new businesses in FY20
By 2020, life insurance is expected to account for 35% of India’s total savings
During FY12–FY20, premium from new business of life insurance companies in India increased at a 15% CAGR to reach Rs 2.13 trillion
In FY20, motor insurance constituted 36.60% of the non-life insurance market in India
Share of private sector in life insurance segment grew from around 2% in FY03 to over 31.3% in FY20
Gross direct premiums of non-life insurers in India reached US$ 27.09 billion in FY20 from US$ 14.95 in FY16
Private insurance coverage is estimated to grow by nearly 15% annually till 2020

Strategies updated

The industry is witnessing a shift towards the traditional non-linked insurance plans with the share of non-linked insurance increased from 59% in FY09 to 85% in FY18
Traditional products are being customised to meet specific needs of Indian consumers
The market share of private sector companies in the non-life insurance market rose from 15% in FY04 to almost 56% in FY21
Players in the industry are investing in Information Technology to automate various processes and cut costs without affecting service delivery
IRDAI has mandated having an E-insurance (electronic insurance) account to purchase insurance policies
Focus on providing one kind of service help insurance companies in differentiation

Growth drivers

The growing use of the internet has pushed the demand
Higher personal disposable incomes would result in higher household savings that will be channeled into different financial savings instruments like insurance and pension policies
The increasing number of insurance providers with various sophisticated products at competitive prices
Regulations which are conducive for the growth of the industry

New Opportunities

Overall insurance penetration (premiums as % of GDP) in India was 3.69 per cent in 2017, providing a huge underserved market
Opportunities in Crop insurance, Micro-insurance, Health insurance markets, Motor insurance markets, Low-income urban and pension markets

Key Industry Organizations