India’s insurance premium volume stands at $ 127 Bn as of 2021 (Life – 76%, Non-Life – 24%). Total insurance premium in India increased by 13.5% in 2021 as against a global average of 9%.
- In terms of total premium volumes, it is 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 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 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 the greater private sector participation and an improvement in distribution capabilities, along with substantial improvements in operational efficiencies
- Snapshot of key insurance metrics
- Insurance density in India has increased from $ 11.1 in 2001 to $ 91 in 2021 (Life insurance- $ 69, Non life insurance – $ 22)
- Insurance penetration in India has been steadily increasing (from 2.7% in 2000 to 4.2% in 2021)
- 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% of the the NBP of ~$45 bn
- $ Bn
Premium Volume : Life Insurance : 2021
- $ Bn
Premium Volume: Non Life Insurance : 2021
Growth in New Business Premium (Life) in FY23
New Business Premium (Life) in FY23
The Indian Insurance market is expected to reach $200 BN by 2027.
India is 9th largest Life Insurance Market globally
India is the 14th largest Non-Life Insurance market globally.
Ayushman Bharat PM-JAY is the largest health assurance scheme in the world and is funded by the Government.
- Industry Scenario
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India’s share in global life insurance market was 3.23% in 2021. Life insurance premium in India increased by 14.2% in 2021 whereas global life insurance premium increased by ~10%.
- India's share in global non-life insurance market was ~1% in 2021. The Indian non-life insurance sector recorded 11.3% growth during 2021 whereas the global non-life insurance premium had only 8.4%
- The insurance penetration of life insurance sector has gone up from 2.2% in FY 02 to 3.2% FY 22
- The insurance penetration of non-life insurance sector has gone up from 0.5% in FY 02 to 1% FY 22
- The life insurance density has gone up from $ 9.1 in FY 02 to $ 69 in FY 22
- The non-life insurance density has gone up from $ 2.4 in FY 02 to $ 22 in FY 22
- Life insurance industry recorded a total written premium income of $ 91 Bn (INR 6.93 lakh crore) in FY 22, registering growth of 10.2% over FY 21. The private sector insurers posted 17.4% growth in premium, LIC recorded 6.1% growth
- In FY 22, new business and renewal premium accounted for 45.5% and 54.5% of the total premium received by life insurers, respectively
- The traditional products registered a growth of 10.1% in FY 22, with premium of $ 77 Bn (INR 5.92 lakh Cr).
- Unit-linked products (ULIPs) registered a growth of 10.2% with increase in premium to $ 13 Bn (INR 1 lakh Cr) in FY 22. The share of unit-linked products in total premium was 14.5%
- In FY 22, the life insurance industry registered a growth of 3.5% in the number of new policies issued against FY 21
- Non-life insurance industry underwrote total direct premium of ~$ 29 Bn (INR 2.21 lakh Cr) in FY 22, registering a growth of 11% from FY 21
- The Indian health insurance industry reported a growth of 26.3% in FY 22, making it the largest non-life insurance sub-segment with a market share of about 36%, followed by the motor segment at 32%
- Fire and other segments also recorded positive growth of 7.1% and 1.1%, respectively in FY 22
- The general and health insurers have issued 266 Mn policies in FY 22, reporting an increase of 7.7%
- The number of insurance policies issued to women in the year 2021-22 is around 10 Mn which is 34.7% of 30 Mn total insurance policies as against a share of 33% in 2020-21
- The total mortality protection gap in India stands at $16.5 Tn (as of 2019) with an estimated protection gap of 83% of total protection need. This offers a huge opportunity to life insurers with an estimated additional life premium opportunity of average $78.2 Bn annually over 2020-30
- The insurance regulator IRDAI has also undertaken various initiatives towards boosting the insurance penetration, such as permitting insurers to conduct video-based KYC, launching standardized insurance products and allowing insurers to offer rewards for low-risk behaviour
- IRDAI has taken up the mission of ‘Insurance for All’ by 2047 which is expected to lead to a significant increase in insurance penetration and would help in bolstering the ease of doing business and will aid in making the sector more investment-friendly
- IRDAI has “engaged four mission-mode teams” to work on transition to a risk-based solvency regime from current regime of capital or factor-based solvency, with the aim of beginning the shift within two years
- IRDAI has allowed PE funds to directly invest in insurers, allowed promoters to dilute up to 26% stake & dispensed with its approval for raising capital such as subordinated debt and preference shares
- The IRDAI constituted a working group on standardization of Cyber Liability Insurance. IRDAI issued a guidance document on Product Structure for Cyber Insurance
- Bima Sugam: A digital platform for insurance products & services, launched as an initiative by the IRDAI to connect and empower all insurance stakeholders and cater to all insurance needs under one roof
68% of India’s population is young and 55% of its population is in the age group of 20-59 (working population) in the year 2020 and is estimated to reach 56% of the total population by 2025. These point towards a young insurable population in India
Wide middle-class expansion
By 2030, India will add 140 Mn middle-income and 21 Mn high-income households which will drive the demand and growth of Indian insurance sector.
Digital behaviour patterns
Customers are now starting to prefer digital modes for their insurance needs - 73%/62% of customers preferred the online mode for GI/HI products (2020). Agents’ ease with digital tools has also grown, with 63% of agents comfortable with video-calling clients and >50% amenable to virtual renewals. India is the 2nd largest Internet user market. ~1 Bn Internet Users by 2026.
Pandemic-related shift in demand patterns
COVID has expedited digital adoption and 67% of agents felt customers are more willing to use portals/apps post-COVID. Further, the pandemic increased the insurance penetration rate and triggered awareness on insurance and demand for protection products, especially health insurance
AB PM-JAY (world’s largest health assurance scheme): 230+ Mn beneficiaries have been provided Ayushman cards, and over 44 Mn hospital admissions have been authorised through a network of 25,969 empanelled healthcare providers, including 11,700 private hospitals (9th March 2023) Pradhan Mantri Suraksha Bima Yojana: 313 Mn beneficiaries have been enrolled under the scheme, and more than 1 lakh claims have been disbursed (30 Nov’22) Pradhan Mantri Jeevan Jyoti Bima Yojana: 144 Mn beneficiaries have been enrolled under the scheme, and more than 6 lakh claims have been disbursed (30 Nov’22) Pradhan Mantri Fasal Bima Yojana (risk coverage against crop damage), is the world’s number one crop insurance scheme in terms of farmer applications enrolled and is also the world’s 3rd largest crop insurance scheme in terms of gross premium. Between 2016 and 2022, 276 Mn applications were received under the scheme, and claims of about $ 16.7 Bn (INR 1.28 lakh crore) have been paid to the farmers
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