A robust insurance sector stabilises any country’s economy as it facilitates long-term funds for infrastructural development by strengthening the overall risk-taking ability. India’s Rs. 221, 400 crore (US$ 40.26 billion) insurance industry is at a stage of consolidation wherein many foreign players are eyeing the immense potential of the fast-growing economy. Relatively lower insurance penetration, rising income levels of the middle-class population and increasing awareness about the concept of insurance are certain factors that promise bright future for the Indian insurance segment.
Life insurance products’ penetration in India is around 4.5 per cent while that of general insurance products is around 1 per cent. Indian insurance industry is rapidly opening up to foreign players. Currently, 22 out of 24 life insurance players and 18 out of 27 non-life insurers have foreign partners, and many more are vying to enter the Indian landscape.
Premium collection by general insurance companies increased by 24.7 per cent year-on-year (y-o-y) in September 2012 at Rs 6, 059.02 crore (US$ 1.1 billion), according to the data compiled by the sector regulator Insurance Regulatory and Development Authority (IRDA). The total premium stood at Rs 34,001.09 crore (US$ 6.18 billion) for April-September 2012.
In terms of premium collections for life insurance segment, private players collected Rs 7,095 crore (US$ 1.29 billion) in April-September 2012 period while state-owned Life Insurance Corp of India (LIC) recorded a remarkable 24 per cent y-o-y growth in premium collections at Rs 15, 532.7 crore (US$ 2.82 billion) during the period. LIC’s support helped the industry post a 15 per cent y-o-y growth in premium collected in the first half of 2012-13.
World Economic Forum’s latest report ‘Financial Development Report 2012’ has named India as the world's top-ranked country in terms of life insurance density. Life insurance density is the ratio of direct domestic premiums for life insurance to per capita gross domestic product (GDP) of a country. India has been ranked 40th in terms of overall financial development of a country, but is much ahead of larger economies like the US, the UK, Japan and China for life insurance density.