Insurance
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
- Life Insurance Corporation of India
- Max Life Insurance Company
- HDFC Life Insurance Company
- ICICI Prudential Life Insurance Company
- Tata AIA Life Insurance
- Bajaj Allianz Life Insurance Company
- SBI Life Insurance Company
- Reliance Nippon Life Insurance Company
- Kotak Life Insurance Company
- Agriculture Insurance Co. of India Ltd.
- Shriram General Insurance Co. Ltd.
- Cholamandalam MS General Insurance Co. Ltd.
- HDFC ERGO General Insurance Co. Ltd.
- Edelweiss General Insurance Co.Ltd.
- United India Insurance Co. Ltd.
Sources