Insurance industry in India - Brief Introduction
The Indian insurance sector has witnessed significant growth - the number of life policies in force has increased nearly 12-fold over 2000-2010, and health insurance policies nearly 25-fold. Factors like better terms, availability of a wide variety of products (like unit-linked insurance products, whole life, maximum net asset value (NAV) guarantee etc), and government incentives have boosted the growth of the industry.
Data released by the Insurance Regulatory and Development Authority (IRDA) indicates that 23 life insurers registered Rs 18,282.86 crore (US$ 4.1 billion) by writing new policies during April-June 2011. State-owned Life Insurance Corporation (LIC) of India, collected premiums worth about Rs 13,341.97 crore (US$ 3 billion), while its private peers collected 4,940.89 crore (US$ 1.1 billion) as new first-year premium during the period.
In June 2011, industry collection stood at Rs 6,022.98 crore (US$ 1.35 billion). Revenue earned by selling new policies increased by 15.13 per cent in FY11, amounting to Rs 1,25,826.03 crore (US$ 28.24 billion) against 1,09,290.38 crore (US$ 24.53 billion) in FY10.
Insurance in India - Market Dynamics
Currently, the insurance industry, including life and non-life companies, has deployed a capital of about Rs 35,000 crore (US$ 7.8 billion) out of which Rs 26,000 crore (US$ 5.8 billion) comes from the life insurance segment. Foreign players have contributed about Rs 9,000 crore (US$ 2 billion).
The General insurance industry registered 22.35 per cent growth during the first quarter (April-June) of FY12 in terms of gross written premium.
Public sector player New India Assurance Ltd. grew 15.97 per cent during the first quarter of FY12 by collecting US$ 520 million through new policies.
The second largest vertical under non-life insurance umbrella, health insurance is witnessing significant growth from the last two fiscals. The growth in premium is expected to continue at a compound annual growth rate (CAGR) of around 28.5 per cent during FY12-FY14. Rising healthcare costs and awareness, along with government support and incentives have attracted many private players in the sector. The huge demand supply gap in the industry provides large scope of growth and progress in the coming years.
Private and public players witnessed an increase of 33 per cent in terms of gross health insurance premium collected for FY11. Increase of insurance premium rates (in both retail and group insurance segments) by almost 30 per cent in last couple of years has boosted the industry growth, according to Sanjay Datta, Head of customer service for health and accidents, ICICI Lombard. Further, government-endorsed insurance schemes like Rashtriya Swasthya Bima Yojana and support from state governments have strengthened premium collections in the sector, as per Virendra Kumar, General Manager, health insurance, New India Assurance.