India was ranked 10th among 147 countries in the life insurance business, with a share of 2.03 per cent, in FY13. The country was ranked 19th among 147 countries in the non-life premium income, with a share of 0.66 per cent, in the same fiscal.
The life insurance premium market grew at a compound annual growth rate (CAGR) of 16.5 per cent, from US$ 11.5 billion in FY03 to US$ 52.9 billion in FY13, whereas the non-life insurance premium market rose at a CAGR of 14.9 per cent, from US$ 2.9 billion in FY03 to US$ 11.6 billion in FY13.
The share of the private sector in life insurance market has been growing over the years, from around two per cent in FY03 to 27 per cent in FY13. The gross direct premium of private companies increased from US$ 0.2 billion in FY03 to US$ 14.4 billion in FY13 at a CAGR of 51.1 per cent.
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. The Government of India has extended Rashtriya Swasthya Bima Yojana (RSBY) to cover unorganised sector workers in hazardous mining and associated industries.
India's robust economy is expected to sustain the growth in insurance premiums written. Higher personal disposable incomes would result in higher household savings that can be channeled into different financial savings instruments such as insurance and pension policies. Household savings are expected to grow to US$ 540 billion by 2015E from US$ 89 billion in 2000. Financial savings are also expected to grow to US$ 248 billion by 2015E from US$ 45 billion in 2000.
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