Increasing GDP, coupled with the growth in demand, has opened a plethora of opportunities for India's insurance industry. Since the entry of the private sector post liberalisation, the Indian life insurance sector has changed significantly to offer a range of life insurance solutions through a distribution network spread across the country. The Insurance Regulatory and Development Authority (IRDA) has played an important role in providing direction to the industry.
India currently has 24 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 23 life insurance companies. The country offers huge growth potential for insurance companies, offering an opportunity for foreign companies to enter the sector. Standard and Poor's rating services has rightly described the non-life insurance industry in India as a 'goldmine of growth potential'.
The total insurance penetration, which is the ratio of insurance premium as a percentage of GDP, has increased from 2.32 in 2000-01 to 5.10 in 2010-11, according to IRDA. Life insurance penetration in 2010-11 was 4.40, whereas the non-life insurance penetration has increased from 0.60 in 2009-10 to 0.71 in 2010-11.
As far as the conventional plans of Life Insurance policies are concerned, there is a growth of 11 per cent in policies and 22 per cent in premium as on February 29, 2012, according to the Minister of State for Finance, Mr Namo Narain Meena.
The Indian health insurance market accounted for 3.2 per cent of the overall insurance industry in 2011. Key factors driving the growth of the health insurance sector are rising healthcare expenditure, increasing disposable income and the rise in the number of people with affluent lifestyles. Though the health insurance market is currently dominated by public-sector companies, the top six private health insurance companies increased their cumulative market share from 17.2 per cent to 29.1 per cent during 2007 to 2011.
The initial phase of the life insurance industry witnessed high growth which was propelled by a buoyant economy. As the industry progressed from its infancy towards maturity, the regulatory architecture played a critical role by guiding and steering the industry on the right track. It has helped in building a robust insurance industry and made favourable initiatives to give the industry an additional boost.