The Insurance sector comprises two primary segments – Life and General Insurance. Life insurance includes whole life insurance, Term life insurance, Child Plans, Annuities life policies, and Endowment policies, etc. General insurance includes motor insurance, property insurance, and health insurance; crop insurance liability insurance, travel insurance, marine insurance, cargo insurance, etc. For details of these policies read: EXPLAINED: DIFFERENT TYPES OF LIFE AND NON-LIFE INSURANCE POLICIES.
The insurance sector in India is a mix of both private and public sector. India has 67 insurers of which 24 are life insurers, 26 are general insurers, 5 are stand-alone health insurers, and 12 are re-insurers (March 2022). The insurance industry in India has witnessed an impressive growth rate over the last two decades driven by greater private sector participation and an improvement in distribution capabilities, along with substantial improvements in operational efficiencies
Globally, the share of life insurance business in total premiums was 46.34 per cent and the share of non-life insurance premiums was 53.66 per cent during 2019. However, the share of the life insurance business in India was high at 74.94 per cent while the share of non-life insurance business was at 25.06 percent.
Insurance penetration and density are two metrics, among others, often used to assess the level of development of the insurance sector in a country. While insurance penetration is measured as the percentage of insurance premiums to GDP, insurance density is calculated as the ratio of premiums to population (Represent per capita premium).
Insurance penetration which was 2.71 percent in 2001 has steadily increased to 3.76 percent in 2019 (Life 2.82 percent and Non-Life 0.94 percent). Insurance penetration in some of the emerging economies in Asia, i.e., Malaysia, Thailand, and China during the same year was 4.72, 4.99, and 4.30 percent respectively. The insurance density in India which was USD 11.5 in 2001, reached USD 78 in 2019 (Life- USD 58 and Non-Life – USD 20). The comparative figures for Malaysia, Thailand, and China during the same period were USD 536, USD 389, and USD 430 respectively. Globally insurance penetration and density were 3.35 percent and USD 379 for the life segment and 3.88 percent and USD 439 for the non-life segment respectively in 2019. (Source: SwissRe Sigma various issues). According to S&P Global Market Intelligence data, India is the second-largest insurance technology market in Asia-Pacific, accounting for 35% of the US$ 3.66. Insurance penetration in India has been steadily increasing (from 2.7% in 2000 to 4.2% in 2021). Insurance density in India has increased from $11.1 in 2001 to $91 in 2021 (Life insurance- $69, Non-life insurance – $22). The insurance penetration in the life insurance sector was 3.2% in 2021 -twice more than emerging markets and slightly above the global average. In FY 22, the gross direct premium of non-life insurers and life insurers witnessed a YoY growth of 10.8% and 10.2%, respectively. In FY23, the New Business Premium of the life insurance industry grew at 17.91% with private insurers accounting for 37%. (Source: invest India). As per the Insurance Regulatory and Development Authority of India (IRDAI), India’s insurance industry is projected to reach USD 222 billion by 2026 and become the sixth-largest insurance market globally, surpassing countries like Germany, Canada, Italy, and South Korea. India’s insurance premium volume stands at $127 Bn as of 2021 (Life – 76%, Non-Life – 24%). Total insurance premiums collected in India increased by 13.5% in 2021 as against a global average of 9%. In terms of total premium volumes, it is the 10th largest market globally and the 2nd largest of all emerging markets, with an estimated market share of 1.9%. It is expected that premiums will grow by an average of 9% p.a. (in real terms) over the next decade. India is poised to emerge as one of the fastest-growing insurance markets in the coming decade.
India’s insurance sector is projected to record the fastest growth among the G20 countries with the total premium expected to rise at an average rate of 7.1 per cent in real terms during 2024-28. In comparison, the growth rate for the global insurance market will be around 2.4 per cent, said a report by Swiss Re Institute.
The expanding economy, growing middle class, innovation, and regulatory support are driving the insurance market growth in India.
In the period, the life insurance business is expected to record 6.7 per cent growth backed by rising demand for term life cover by the middle-income group and increased adoption of insurtech. Meanwhile, the non-life segment is estimated to grow by 8.3 per cent owing to economic growth, improvement in distribution channels, government support, and a favourable regulatory environment with health premiums forecasted to rise by 9.7 per cent.
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