The total insurance market stood at US$ 72 billion in FY12 and is expected to touch US$ 139 billion by 2015. Over FY03-12, life insurance premiums increased at a compound annual growth rate (CAGR) of 20.1 per cent. Private players have increased their market share in the life insurance market to 29.3 per cent in FY12 from 2 per cent in FY03.
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. LIC is still the market leader, with 70.7 per cent share in FY12, followed by ICICI Prudential, with 4.9 per cent share.
The Insurance Regulatory and Development Authority (IRDA) has recently allowed life insurance companies that have completed 10 years of operations to raise capital through initial public offerings (IPOs). Insurance products are also covered under the exempt, exempt, exempt (EEE) method of taxation, which translates to an effective tax benefit of approximately 30 per cent on select investments.
Crop insurance market in India is the largest in the world, covering around 30 million farmers. The Government of India plans to increase the coverage to 50 million during the 12th Five-Year Plan. Health insurance continues to be one of the most rapidly growing sectors in the Indian insurance industry. Penetration of health insurance is expected to more than double by 2020.