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Insurance Sector in India

May, 2013

Brief Introduction

Indian Insurance sector was thrown open to competition in 2000 and has evolved since then; thanks to robust regulatory framework, positive business environment and economic growth.

The industry is at an inflection point today and all factors are well in place for it to develop into one of the fastest growing financial services markets in the world. Rising income levels and higher awareness are boosting demand and increasingly sophisticated consumers with varied needs are compelling players to come-up with customised products.

Industry Dynamics

Government-owned Life Insurance Corporation (LIC) of India is the country’s largest insurer, controlling approximately 65 per cent of the market.

Life insurance penetration in India is about 4.4 per cent of the country’s gross domestic product (GDP) in terms of total premiums underwritten annually, according to the Insurance Regulatory and Development Authority (IRDA). The penetration is quite less in India as against its peers and hence, the Indian insurance market provides ample opportunities to domestic and international players to harness the profitable avenues in the same.

India tops all the countries in terms of life insurance density, according to the World Economic Forums’ Financial Development Report 2012. It is followed by China, Japan, US & UK.

Key Statistics

  • Life insurance industry, comprising over 20 companies, including public sector LIC, collected total premium of Rs 84,501.75 crore (US$ 15.38 billion) during the April-February period of 2012-13 fiscal. Private insurers together raked-in Rs 23,796.29 crore (US$ 4.33 billion) in these 11 months
  • Meanwhile, the general insurance industry grew by 19.34 per cent in the 11 months of 2012-13 fiscal wherein the 27 non-life insurers collected premium worth Rs 61,885.11 crore (US$ 11.26 billion). The growth was led by SBI General which recorded over three-fold growth in gross premium as compared to last fiscal.
    Of the total premium, the share of 21 private sector players stood at Rs 26,655.35 crore (US$ 4.85 billion) while Rs 31,196.3 crore (US$ 5.68 billion) were contributed by four public sector players --New India Assurance, National Insurance, United India and Oriental Insurance

New Developments/ Product Launches

  • Canada's largest insurer Manulife Financial is contemplating to enter Indian insurance sector. The company is actively doing a market research to find a viable business model to set up its shop here.
    The Indian insurance sector is home to many other foreign players like Allianz, Prudential, Standard Life, Aviva,Aegon and Nippon Life, which are present in the market through joint ventures (JVs)with their respective Indian partners
  • State-owned general insurer New India Assurance is all set to make the best of its international presence. The company that currently operates in 22 countries is planning to enter Qatar, Myanmar and Canada in 2013-14, said G. Srinivasan, Chairman-cum-Managing Director. The company has huge set-up in countries like London, Australia and Japan and has ventures in Kenya, Singapore and other African countries.
    New India Assurance recorded Rs 2, 500 crore (US$ 455.13 million) as its premium income from overseas operations in 2012-13
  • United Indian Insurance Company has drafted its plan-of-action for 2013-14 and has revealed that it would continue to focus on retail business through agents and would add around 530 micro offices in the country. The company also intends to intensify its focus on information technology activities, including expansion of info-kiosks and online policies
  • ICICI Securities and ICICI Lombard General Insurance have together launched a unique general insurance policy for Mutual Fund Systematic Investment Plan (SIP) investors. Using this policy – named ‘Secure Mind’ - 2.6 million customers of ICICIdirect.com can protect their investments made in mutual funds (MF) from unforeseen risks. This is the first-of-its-kind general insurance policy in India to be offered with MF investments