The concept of insurance as we know it today came to India during British colonial rule. Insurance was initially a financial privilege extended to a limited few in the country. However, in the last few decades, the Indian insurance industry has seen tremendous growth with no signs of slowing down. From life insurance to gadget insurance, the Indian insurance market has a lot to offer.
As per Swiss Re, India is one of the fastest-growing emerging insurance markets in the world. In its report, the world’s largest reinsurer noted that India will grow into the sixth-largest insurance market globally by 2023.
Indian insurance market
The Indian insurance market has registered its presence on global lists, specifically for its life insurance premium volume. As per the India Brand Equity Foundation (IBEF), India is the world’s 10th-largest life insurance market. In terms of non-life insurance, India is in the 14th spot.
According to the Insurance Industry Report by IBEF, India has shown a growth rate of 32-34% each year. Of the 58 insurance companies in India, 24 are life insurers, and 34 are non-life insurers.
Life insurance continues to be one of the most popular forms of insurance in India and much of the world. The most notable and one of the oldest life insurance companies, Life insurance Corporation of India (LIC), is the only public sector insurance provider in India. Upon going public in May 2022, it raised Rs 20,560 crore in its initial public offering, the country’s largest so far.
Between 2019 and 2023, India’s life insurance market is expected to increase at a CAGR (Compound Annual Growth Rate) of 5.3%, IBEF noted. Swiss Re said that the life insurance penetration in India was twice as much as the emerging market and above the global average in 2021, touching 3.2%.
As per the National Investment Promotion & Facilitation Agency, life insurers in India grew by 7.49% in 2021. Meanwhile, private life insurers saw a growth of 16.29%.
Private life insurers contributed 33.8% of the industry’s new business premium in FY21. LIC accounted for the rest.
Health insurance in India saw a 13.3% growth in gross direct premium income in FY21. Swiss Re noted that government public health schemes like Ayushman Bharat have led to an increase in health insurance volume.
Among non-life insurance premiums, health insurance accounted for 29.5% of the premiums earned, second only to motor insurance which stood at 34.1% in FY21.
However, non-life insurance continues to take a backseat to life insurance, with non-life insurance penetration (premiums as a percentage of GDP) in 2021 hovering at a mere 1%.
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Future of the Indian insurance market
The Indian insurance market is expected to show an average per annum increase of 9% (in real terms) in premiums over the ten years, Swiss Re reported. This will make the insurance market in India the sixth largest in the world by 2032, ahead of Germany, Canada, Italy and South Korea.
Despite the growth of the Indian insurance market on a global scale, estimates by IDEF show that in FY21 the insurance penetration was only 4.2%.
To further improve the scope of the Indian insurance market, the government also announced Rs. 3,000 crores towards state-owned general insurance companies in February 2021. The government’s systematic effort to improve digitisation across the country has also encouraged the insurance industry’s growth.