The future of India’s life insurance industry promises prosperity and expansion. According to leading data and analytics company GlobalData, the sector is set to soar at an impressive compound annual growth rate (CAGR) of 12.5% from 2023 to 2027.
The projected journey will witness gross written premiums (GWP) surging from 14.5 trillion to a staggering 19 trillion!
GlobalData’s insurance database forecasts a peak growth rate of 14.3% in 2023, further solidifying the industry’s upward trajectory.
The driving forces behind this remarkable growth are multifaceted – from conducive regulatory policies to burgeoning insurance awareness and innovative products delivered by new insurance companies.
Deblina Mitra, the esteemed Senior Insurance Analyst at GlobalData, emphasized the pivotal role of growing awareness and the increased adoption of group insurance practices. As a result, the GWP for life insurance is anticipated to witness double-digit growth up to 2026.
The turning point came in December 2022 when regulatory amendments took centre stage. These groundbreaking changes have opened immense potential, allowing users to make direct private equity investments in insurance companies without the mandatory special purpose vehicle (SPV) route. This simplifies the process and makes it easier for users to invest and potentially profit from the insurance industry.
The regulation changes have empowered insurance companies and stimulated growth in the industry.
- Insurance subsidiaries gained promoter status, allowing more flexibility in ownership provisions.
- Reduced capital requirements on certain life insurance policies freed up 20 billion, promoting innovation and industry expansion.
To achieve the goal of providing insurance coverage to the entire population by 2047, the rules now make it easier for corporate agents and marketing firms to partner with up to six insurers (previously limited to three).
Despite the successes in the insurance industry, there’s a warning to consider. Starting in April 2023, new tax rules could impact premium growth. Non-linked insurance policies with yearly premiums over 500,000 will now be taxed on their maturity benefits. This tax change could affect the industry’s expansion since non-linked policies make up a significant 85.4% of the life insurance business.
However, there’s a positive aspect too. New insurers entering the market will increase competition, leading to better and more customer-focused products in the next five years. But still, this growth might face challenges due to the new tax implications.
As the life insurance industry writes its epic saga of growth and transformation, it thrives on a combination of regulatory advancements, innovation, and heightened consumer awareness. Despite challenges, life insurance in India is growing faster than ever before, providing financial security to millions and taking the insurance landscape to new heights.