BFSI - Insurance

• 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 gross direct premium of non-Life insurers (within and outside India) registered YoY growth of 10.8%, primarily driven by health and motor segments. The net incurred claims of non-Life insurers stood at INR 1.4 Lakh Cr in FY22, primarily driven by rising per capita income, product innovations and customization, development of strong distribution channels, and rising financial literacy.
• 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 Cr) 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

Regulatory Landscape

• 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