Snapshot

Insuring India

India Insurance market stands at $131 Bn as of FY22. The Indian insurance industry grew at a CAGR of 17% over the last two decades and is expected to continue its commendable growth trajectory in the future years

  • The insurance industry in India has 58 insurance companies, including 34 non-life insurers (25 general insurers, 7 standalone health, 2 specialized insurers). 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
  • Private Life Insurers are expected to grow their retail APE at a CAGR of over 17% between 2021-23, and new retail term premiums are expected to double in 5 years. The Private Non-Life insurance segment is forecasted to grow at 16% in FY22 and 14% in FY23. Standalone Health Insurers are expected to grow by over 25% in FY22 due to the increased focus on healthcare.
  • The New Business Premium for Life Insurers has grown at a CAGR of 14% over FY14-20 led by the financialization of savings and new product launches, and the insurance industry size in India is expected to grow at 12.5% CAGR over the next decade 2020-30 led by specialized products such as protection and annuities.
  • Non-life insurers Collective gross direct premium underwritten for non-life insurance companies grew 22.99% y-o-y to INR 54,491.27 cr for the first quarter this fiscal from INR 44,303.91 cr for the same period last fiscal.
  • $ bn

    Total Written Premium (Life Insurance)

  • $ bn

    Gross Direct Premium Income (Non-Life Insurance)

  • %

    Share of New Business Premium in Total Premium (Life Insurance)

  • %

    Share of Motor Premium in Total Non-Life Premium

Ayushman Bharat PM-JAY is the largest health assurance scheme  in the world and is funded by the Government. 

India is the 10th largest Life Insurance market globally

India is the 15th largest Non-Life Insurance market globally

India is the 4th largest general insurance market in Asia and the 14th largest globally

Industry Scenario

India is ranked 11th in global insurance business. India’s share in global insurance market was 1.72% during 2020 and total insurance premium volume in India increased by 0.1%

  • India’s insurance penetration was pegged at 4.2% in FY21 (from 3.76% in 2019-20), with life insurance penetration at 3.2% and non-life insurance penetration at 1%
  • The market share of private sector companies in the non-life insurance market rose from 15% in FY2004 to 49.3% in FY2021.
  • In terms of the size of insurance industry in India, the share of life insurance in total premium in India is 75.24% and the share of non-life premium is 24.76% (2020)
  • Life insurers recorded new business premium of INR 2.78 tn ($38 bn) in FY21 growing at 7.49% over the last year with private life insurers growing at 16.29%. Private Life Insurers account for 33.8% of the industry’s new business premium (FY21) with the rest being accounted for by the Life Insurance Corporation of India (LIC).
  • The Life Insurance Industry in India recorded a total premium of INR 5.73 tn ($81.3 bn) in FY20 witnessing a growth of 12.75% over the previous year and the private insurers accounted for 33.7% of total premium underwritten by the industry. New business premium contributed 45.25% of the total premium and witnessed a strong growth of 20.59% over FY19. 60% of the new business premium was derived from single premium with remaining 40% accounted for by first year premiums
  • The traditional (non-linked) products accounted for 85% of the total premium written in FY20 and share of ULIPs (linked products) in the total premium stood at 15%.
  • During the last year (FY20), life insurers issued 288.47 lakh new individual policies, out of which LIC issued 75.9% of policies and the private life insurers issued 24.1% of policies.
  • In FY21, non-life insurers (comprising general insurers, standalone health insurers and specialized insurers) recorded a 5.19% growth in gross direct premiums.
  • Motor insurance accounted for 34.1% of the non-life insurance premiums earned, followed by health insurance at 29.5%, in FY21 Post-Covid rising demand for personal mobility space is leading to a shift in vehicle ownership patterns and may create an opportunity for motor insurers
  • Health insurance witnessed 13.3% growth in GDPI in FY21, while fire insurance and liability insurance observed 28.1% and 16.4% growth respectively in the same period
  • Government schemes and financial inclusion initiatives shall have helped in driving the adoption & penetration across all segments. The government’s flagship initiative for crop insurance (PMFBY) has led to significant growth in the premium income for crop insurance, and now covers over 55 mn farmer applications year-on-year. Even during the COVID-19 lockdown period, nearly 70 lakh farmers have benefitted from it, and claims worth INR 87.4 bn ($1.2 bn) were transferred to the beneficiaries.
  • AB PM-JAY is an entitlement-based scheme under Ayushman Bharat and is fully funded by the Government. It is the largest health assurance scheme in the world and aims at providing a health cover of INR 500,000 ($6,900) per family per year for secondary and tertiary care hospitalization to over 107 mn vulnerable families (approximately 500 mn beneficiaries).
  • 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.
  • Going forward, general insurance companies will be key beneficiaries of the opening-up of economies, especially with improved trade activity increasing demand for motor and health insurance. Strong growth in the automotive industry over the next decade is expected to boost the motor insurance market. Meanwhile, the life insurance sector will benefit from a steep yield curve, with low short-term rates and higher long-term rates.
  • Digital issuance and online channels are expected to witness continued growth, the share of web aggregators within digital insurance has been constantly increasing and web-aggregators currently originate 30-40% of digital insurance.
  • 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 retail protection sum assured is estimated to grow 8X by over 2020-30, implying 23% premium CAGR
  • India is the 2nd largest InsurTech market in the APAC region, accounting for 35% of the $3.66 bn capital invested in this region. The online individual insurance market opportunity is estimated to be $1.25 bn by FY25 more than tripling from $365 mn in FY20.
  • The growth of the insurance market is being supported by important government initiatives, strong democratic factors, conducive regulatory environment, increased partnerships, product innovations, and vibrant distribution channels.
  • The increase in the FDI in Insurance from 49% to 74% announced in the Union Budget (Feb’21) shall further help in driving increased penetration and coverage by enabling additional avenues for capital support required for the expansion of the insurance industry in India.
  • The recent pandemic has emphasized the importance of healthcare on the economy, and health insurance would play a critical role in the effort to strengthen the healthcare ecosystem.

GROWTH DRIVERS

  • Favourable Demographics

    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

  • Government Program

    Government initiatives such as PM-JAY, PMFBY, PMJJBY, PMSBY etc. are increasing insurance penetration

arrowarrow

Industrial Land Bank Portal

GIS - based map displaying available infrastructure for setting up business operations in the state.

Major Investors

Data On Map

Latest In BFSI - Insurance

Press ReleaseAug 30, 2022

Issuance of e-Policies regulations 2022 Exposure Draft

Read Now

Press Release

Issuance of e-Policies regulations 2022…

Press Release

IRDAI Single window NOC portal

Press Release

Withdrawal of exemption from GST on services…

Introduction of new add-ons in Motor…

Reduced compliance burden for insurance…

FAQs

Frequently
Asked Questions

What are some of the Government Insurance schemes?

Some of the Government Sponsored Socially Oriented Insurance Schemes are:

  • Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  • Pradhan Mantri Suraksha Bima Yojana(PMSBY)
  • Life Cover under Pradhan Mantri Jan Dhan Yojana (PMJDY)
  • Varishtha Pension Bima Yojana
  • Pradhan Mantri Fasal Bima Yojana(PMFBY)
  • Pradhan Mantri Vaya Vandana Yojana(PMVVY) ·
  • Restructured Weather Based Crop Insurance Scheme (RWBCIS)

For more information, click here.

Was it helpful?

How can one commence an insurance business in India?

Any entity desiring to carry on insurance business in India should make an application to the Insurance Regulatory & Development Authority of India (IRDAI) for issuance of requisition for registration application form. For more information, please read the IRDAI (Registration of Indian Insurance Companies) Regulations, 2000 available here. Further, for foreign investments, please refer to the Indian Insurance Companies (Foreign Investment) Rules, 2015 available on the IRDAI website https://www.irdai.gov.in/https://www.irdai.gov.in/, and the FDI Policy related to insurance activities available here.

Was it helpful?

What are the classes of insurance business for which a registration application can be made?
  • Life insurance business
  • General insurance business
  • Health insurance business exclusively
  • Reinsurance business.

For more information, please read the IRDAI (Registration of Indian Insurance Companies) Regulations, 2000 available here.

Was it helpful?

How can a foreign reinsurer operate in India?

Foreign reinsurers, both Lloyd’s and other reinsurers, can operate in India by registering under the IRDAI (Lloyds India) Regulations 2016 or IRDAI (Registration and Operations of Branch Offices of Foreign Reinsurers other than Lloyd’s) Regulations, 2015, respectively. For more information, please access the regulations here and here. Further, for foreign investments, please refer to the Indian Insurance Companies (Foreign Investment) Rules, 2015 available on the IRDAI website here, and the FDI Policy related to insurance activities available here.

Was it helpful?

What is the quantum of foreign investment allowed in Insurance business in India?

The FDI policy permits 74% foreign investment in Indian insurance companies. Further, all Indian insurance companies with foreign investment need to ensure compliance with the Indian Insurance Companies (Foreign Investment) Rules, 2015 (available on the IRDAI website here) and other applicable rules and regulations of the IRDAI. This includes the new resident directors/KMPs, additional independent directors and solvency requirements as mentioned in the Foreign Exchange Management (Non-Debt Instruments) Rules 2019, available on the RBI website here.

Was it helpful?

VIEW ALL

Invest India Timeline

2022
DRAG TO VIEW MORE

Disclaimer: All views and opinions that may be expressed in the posts on this page as well as post emanating from this page are solely of the individual in his/her personal capacity