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 the sector.
The Indian insurance market has grown from US$ 13 billion in FY02 to US$ 70 billion in FY11 and is further expected to grow to US$ 139 billion in FY15. Over FY02-11, life insurance premiums increased at a compound annual growth rate (CAGR) of 21.6 per cent. Motor insurance forms the largest non-life segment with a share of 41 per cent followed by health insurance accounting 23 per cent of the total in FY12.
The emergence of an affluent middle class is triggering the demand for both life and non-life personal insurance. The Insurance Regulatory and Development Authority (IRDA) Act, 1999, has allowed foreign direct investment (FDI) of up to 26 per cent in the insurance sector on automatic route subject to obtaining license from IRDA. The Cabinet has also approved increase of FDI limit to 49 per cent through the Insurance Laws Amendment Bill (2008).
The opening of pension market with the passing of the Pension Fund Regulatory Development Authority (PFRDA) Bill 2011 will make the market more conducive for private life insurers. Further, the rapid development in tier II and tier III cities and growth in new bankable households have led to the emergence of a large insurable class with an appetite for sophisticated life insurance products.