Trade Analytics
Insurance
The total market size of the insurance sector in India is projected to touch US$ 350-400 billion by 2020.

Indian Insurance Industry Analysis

Latest update: April, 2018

 

 

  • Insurance penetration reached 3.4 per cent in FY16 and is expected to cross 4 per cent in FY17.
  • In Union Budget 2017, government increased the coverage from 30 per cent to 40 per cent under Pradhan Mantri Fasal Bima Yojna

 

 

 

 

 

 

Source: Insurance Regulatory and Development Authority (IRDA)

 

Last Updated: April, 2018

Post liberalisation, the insurance industry in India has recorded significant growth. The Indian insurance industry is expected to grow to US$ 280 billion by FY2020, owing to the solid economic growth and higher personal disposable incomes in the country. Overall insurance penetration in India reached 3.49 per cent in FY17 from 2.71 per cent in 2001. Premium income of the life insurance segment had increased 14.04 per cent in FY17 to Rs 4.18 trillion (US$ 64.92 billion). The total insurance market expanded from US$ 23 billion in FY05 to US$ 84.72 billion in FY17. The domestic life insurance industry registered 17.65 per cent y-o-y growth for new business premium in 2017-18 (up to February 2018), generating a revenue of Rs 1.65 trillion (US$ 25.44 billion). Gross direct premiums of non-life insurers in India reached Rs 1.51 trillion (US$ 23.38 billion) in FY18. Over FY12-18, non-life insurance premiums (in Rs) increased at a CAGR of 16.65 per cent.

There are 24 life insurance and 33 non-life insurance companies in the Indian market who compete on price and services to attract customers. There are two reinsurance companies. The industry has been spurred by product innovation, vibrant distribution channels, coupled with targeted publicity and promotional campaigns by the insurers. Private sector companies hold 48.01 per cent market share in the general insurance segment and 28.93 per cent market share in the life insurance segment.

Government has approved the ordinance to increase Foreign Direct Investment (FDI) limit in Insurance sector from 26 per cent to 49 per cent which would further help attract investments in the sector.

The Insurance Regulatory and Development Authority (IRDA) 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. In 2015, Government introduced Pradhan Mantri Suraksha Bima Yojna (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJBY) to bring more people under the insurance cover. Enrolments under the Pradhan Mantri Suraksha Bima Yojana (PMSBY) reached 130.41 million in 2017-18. National National Health Protection Scheme was announced under Budget 2018-19 as a part of Ayushman Bharat. The scheme will provide insurance cover of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families in India.

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.

Sectoral Presentation (April, 2018)

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