The Indian insurance industry is hugely driven by higher disposable incomes, changing demographics, Government efforts, launch of new products, lesser complexities and entry of foreign players. The sector is not only outpacing India's economic growth figures, but is also standing strong as an important financial segment through turbulent times.
As per industry estimates, insurance penetration in India stood at 5.1 per cent in fiscal 2010-11. While life insurance penetration was marked at 4.4 per cent during the year, general insurance sector penetrated to an extent of 0.7 per cent in 2010.
As of now, insurance accounts for just 3 per cent of overall healthcare expenditure in India which implies that there lies a great potential to enhance the penetration of insurance as a concept. The scope of growth is further enhanced by rural India's development as a major contributor to the economy as the clan residing in hinterlands is increasingly getting aware of new products and services across all the economic and social segments.
The Rs 2.9 trillion (US$ 58.7 billion)-Indian life insurance industry has emerged as the mainstay of entire insurance space. With over 35 crore life insurance policies in force, the industry has registered remarkable growth since its privatisation in 2000.
The overview further discusses how the sector has fared in terms of growth, developments and Government participation in the recent past.
The 24 life insurance players' premiums collected in April-December 2011 stood at Rs 71, 953.54 crore (US$ 14.59 billion) while the industry sold about 27.24 million policies during the period, according to data collected by the Insurance Regulatory and Development Authority (IRDA).
With respect to general insurance industry, there was a growth of 24 per cent in first three quarters of 2011-12 in gross written premium collected. The general insurance industry collected premium of Rs 42,023.3 crore (US$ 8.51 billion) by writing new policies during the period.
While private insurers registered a growth of 26.73 per cent in premium collection at Rs 17,525.3 crore (US$ 3.55 billion), the four state-owned general insurance companies collected Rs 24,498.1 crore (US$ 5 billion) (22.1 per cent higher than the corresponding period a year ago).
According to a recent report by UK-based research firm BRICdata, Indian health insurance market would scale new heights in terms of growth owing to the country's robust economic growth, changing demographic patterns, expected increase in foreign direct investment (FDI) limits and the expansion of distribution networks. The Indian health insurance segment accounted for 3.2 per cent of the overall insurance industry in 2011 thereby leaving a lot of scope for further growth and penetration. During the review period (2007-2011), the penetration of Indian health insurance products stepped up from 0.07 per cent in 2007 to 0.19 per cent in 2011, as many new policies were sold in hinterlands.
The health insurance business constitutes more than 25 per cent of the general insurance industry in India. Health insurance premium collection during the April-September period of 2011-12 rose 21.3 per cent to Rs 6,721.53 crore (US$ 1.36 billion) from Rs 5,540.34 crore (US$ 1.12 billion) in the year-ago period.