India’s insurance market is expected to reach a staggering USD 222 billion by 2026 and is growing at an annual rate of 32-34%! It is already the fifth largest among all the emerging insurance markets in the world. However, despite many growth drivers, the Indian insurance market continues to face certain challenges that need attention, deliberation, and solutions.
World’s biggest global insurance summit is set to be hosted in India later in 2023, bringing Indian insurers into focus and attracting investments. It will likely coincide with the G-20 meeting, helping put India on the global insurance map.
Read more about the Indian insurance sector and the much-hyped insurance summit.
World’s biggest inaugural global insurance summit: What does it mean for India?
This first-of-its-kind and state-sponsored event, likely to be held in September, will bring leading insurers, broking firms, regulators, reinsurers, and actuarial organisations on a single platform to exchange ideas and opinions on the roadblocks and possibilities dotting India’s insurance landscape.
Regulators, important policymakers, and government representatives from developed countries will also likely be a part of this summit. Aligning the event with India’s G-20 presidency is expected to highlight the importance of financial security and stability in a world preparing for economic uncertainty. It is also likely to draw investments necessary for enhancing the insurance sector in India.
Discussions at the world’s biggest global insurance summit will focus on insurance penetration in India, how insurers can keep up with dynamic market needs, and the importance of strategic partnerships, among others.
Let’s read further on the current state of the insurance sector in the country.
India’s Insurance Market – Drivers and Challenges
The Insurance Regulatory and Development Authority India (IRDAI) aims to accomplish its mission of ‘Insurance for all by 2047’ by introducing multiple aggressive measures.
Currently, the key factors driving the growth of India’s insurance sector are:
- Government initiatives
- Fast digitisation (especially involving Artificial Intelligence and Robotic Process Automation)
- Innovative products
- Progressive regulations
- Conducive partnerships
- Powerful and multiple channels of distribution
- Increased awareness (especially about life and health insurance) in the wake of the recent pandemic
- Growing incomes
The upcoming world’s biggest global insurance summit hosted by India will turn the spotlight on the same and help boost the insurance sector. However, the following challenges may also come under scrutiny –
- Widespread financial illiteracy (especially in suburban and rural areas)
- Low confidence in insurance products
- Insufficient understanding of product terms and conditions
- High cost of distribution
- Difficulties in claim settlement
- Fragmented ecosystem
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How is insurance penetration changing in India?
In FY21, insurance penetration in India was recorded as 4.2%. While penetration of non-life insurance was pegged at 1%, life insurance penetration fared better at 3.2%. The alarming number calls for urgent measures and reforms on all fronts.
To improve the scenario, the IRDAI has already launched initiatives such as Bima Sugam, Bima Vistaar, and Bima Vahak. These online platforms will ease the sale and purchase of insurance products, making the process more direct and reducing distribution costs. Product customisation and more choices are on the cards as well. All this is expected to reach a large section of India’s population that is still untapped and lacks access to insurance and other financial instruments.
Moreover, the share of private sector entities in India’s non-life insurance sector increased from 15% to 49.3% from FY04 to FY21, which indicates that the landscape is increasingly becoming competitive. The government is also undertaking multiple measures, such as crop insurance, digital policies, and insurance coverage schemes for healthcare workers, to make insurance more attractive to the masses. More than 110 InsurTech start-ups are functioning in India, fuelling the growth of the insurance market.
Conclusion
The world’s biggest Inaugural Global Insurance Summit, which shall be hosted in India, aims to capture the attention of international stakeholders and generate global interest in the Indian insurance landscape. Despite the immense potential, insurance penetration in India remains alarmingly low as the sector grapples with various challenges. The summit will serve as a crucial platform to address these issues and garner increased investments, thereby elevating the profile of India’s insurance sector on the global stage.
