India is one of the fastest growing insurance markets in the world. Growing interest towards insurance among people; innovative products and distribution channels are aiding the growth of insurance sector. Increasing demand for insurance is offshoring.
The total insurance market has grown from US$ 13 billion in FY02 to US$ 70 billion in the year FY11. Over FY03-11, premiums have increased at a compound annual growth rate (CAGR) of 20.5 per cent. Motor insurance forms the largest non-life segment with a share of 43 per cent followed by Health insurance accounting 23 per cent of the total.
The Insurance Regulatory and Development Authority (IRDA) Act, 1999, has allowed a foreign direct investment (FDI) of up to 26 per cent in the insurance sector on automatic route subject to obtaining license from IRDA. Authorities are now considering an increase of FDI limit to 49 per cent through the Insurance Laws Amendment Bill.
IRDA recently allowed life insurance companies that have completed 10 years of operations to raise capital through initial public offerings (IPOs). Investments from the private sector are increasing as they see a huge opportunity in the growing insurance sector of the country.
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