Post-liberalisation, India’s insurance industry has recorded a significant growth.
Gross premium collected by life insurance companies in India increased from Rs 2.56 trillion (US$ 39.7 billion) in FY12 to Rs 7.31 trillion (US$ 94.7 billion) in FY20. During FY12–FY20, premium from new business of life insurance companies in India increased at a 15 per cent CAGR to reach Rs 2.13 trillion (US$ 37 billion) in FY20.
There are 24 life insurance and 33 non-life insurance companies in the Indian market who compete on price and services to attract customers, whereas, there are two reinsurance companies. The industry has been spurred by product innovation and vibrant distribution channels, coupled with targeted publicity and promotional campaigns by insurers. The market share of private sector companies in the non-life insurance market rose from 15 per cent in FY04 to 56 per cent in FY21 (till April 2020). In life insurance segment, private players had a market share of 31.3 per cent in new business in FY20.
The Government has approved an ordinance to increase Foreign Direct Investment (FDI) limit in the Insurance sector from 26 per cent to 49 per cent, which would further help attract investment in the sector. As per Union Budget 2019-20, 100 per cent FDI was permitted for insurance intermediaries.
Over 53.8 million farmers benefitted under the Pradhan Mantri Fasal Bima Yojana (PMFBY) during FY20. National Health Protection Scheme was announced under Union Budget 2018-19 as part of Ayushman Bharat. The scheme provided insurance cover up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families in India.
Pradhan Mantri Jan Arogya Yojna (PMJAY), the world’s largest social health scheme, is expected to provide coverage to around 50 crore people. Fund of Rs 6,400 crore (US$ 887 million) has been allocated for FY21, which is thrice that of last year.
Enrolments under the Pradhan Mantri Suraksha Bima Yojana (PMSBY) reached 154.7 million till December 2019 since its launch.
Going forward, increasing life expectancy, favourable savings and greater employment in the private sector is expected to fuel demand for pension plans. Likewise, strong growth in the automotive industry over the next decade would be a key driver for the motor insurance market.