Advantage India
Robust
Demand
* As per the Insurance Regulatory and Development Authority of India (IRDAI), India will be the sixth-largest insurance market within a decade, leapfrogging Germany, Canada, Italy and South Korea.
*India's life insurance sector showed strong growth in the first quarter of FY25, with first-year premiums surging by 22.91% YoY to Rs. 89,726.7 crore (US$ 10.75 billion), up from Rs. 73,004.87 crore (US$ 8.75 billion) in the first quarter of FY24.
Attractive
Opportunities
*Insurance market in India is expected reach US$ 222 billion by 2026.
*Robotic Process Automation (RPA) and AI will occupy center stage in insurance, driven by newer data channels, better data processing capabilities and advancements in AI algorithms.
*Bots will become mainstream in both the front and back-office to automate policy servicing and claims management for faster and more personalized customer service.
Policy
support
*The government’s flagship initiative for crop insurance, Pradhan Mantri Fasal Bima Yojana (PMFBY), has led to significant growth in the premium income for crop insurance.
*Ayushman Bharat (Pradhan Mantri Jan Arogya Yojana) (AB PMJAY) aims at providing a health cover of 5 lakh per family per year for secondary and tertiary care hospitalization.
*In past eight years, 56.8 crore farmer applications have been enrolled and 23.2 crore farmers received the claim under (AB PMJAY).
Increasing
Investments
*Over the past nine years, the insurance sector has attracted significant foreign direct investment (FDI) amounting to nearly Rs. 54,000 crore (US$ 6.5 billion), driven by the government's progressive relaxation of overseas capital flow regulations.
*The IPO of LIC of India was the largest IPO ever in India and the sixth biggest IPO globally in 2022.
Introduction
India’s Insurance industry is one of the premium sectors experiencing upward growth. This upward growth of the insurance industry can be attributed to growing incomes and increasing awareness in the industry. India is the fifth largest life insurance market in the world's emerging insurance markets, growing at a rate of 32-34% each year. In recent years, the industry has been experiencing fierce competition among its peers which has led to new and innovative products within the industry.
Over the past nine years, the insurance sector has attracted substantial foreign direct investment amounting to nearly Rs. 54,000 crore (US$ 6.5 billion), driven by the government's progressive relaxation of overseas capital flow regulations.
The insurance industry of India has 57 insurance companies - 24 are in the life insurance business, while 34 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. There are six public sector insurers in the non-life insurance segment. In addition to these, there is a sole national re-insurer, namely General Insurance Corporation of India (GIC Re).
Other stakeholders in the Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims.
The insurance industry has undergone numerous transformations in terms of new developments, modified regulations, proposals for amendments and growth in 2022. These developments have opened new avenues of growth for the industry while ensuring that insurers stay relevant with changing times and the latest digital disruptions.
The Insurance Regulatory and Development Authority India (IRDA) is vigilant and progressive and is determined to achieve its mission of ‘Insurance for all by 2047’, with aggressive plans to address the industry’s challenges.
The growth of the insurance market is being supported by important government initiatives, strong democratic factors, conducive regulatory environment, increased partnerships, product innovations, and vibrant distribution channels.
Insurance Industry was largely dominated by offline channels like corporate agents, offline brokers or banks. Today, rapid digitization, product innovation and progressive regulation policies have made it possible for consumers to buy insurance through multiple distribution channels with the click of a button. The instability of the covid-19 pandemic highlighted the necessity for consumers to invest in products that would increase financial security, one of them being life insurance.
Market Size
The insurance industry in India has witnessed an impressive growth rate over the last two decades driven by the greater private sector participation and an improvement in distribution capabilities, along with substantial improvements in operational efficiencies.
In FY24, non-life players’ saw a premium income increase by 19.5% year-over-year to Rs. 1,14,972 crore (US$ 13.8 billion) due to strong demand for health and motor policies. The business growth for FY24 was driven by health (especially the group segment), motor, and crop insurance.
The business growth for FY24 was driven by health (especially the group segment), motor, and crop insurance.
In 2025 (April- June 2024), life insurers’ new business premiums grew to US$ 10.8 billion, according to Life Insurance Council data.
In the first-year premium share of life insurance in India, LIC dominates with 64.02%, while the private sector holds 35.98%.
Among the private players, SBI Life, HDFC Life and ICICI Prudential Life led the industry in premium collection. SBI Life collected Rs. 7,032.7 crore (US$ 845 million) premium, while HDFC Life and ICICI Prudential Life received Rs. 6,540.4 crore (US$ 785 million) and Rs. 3,768.5 crore (US$ 452 million), respectively.
The premium in the month of March 2023 for the private life insurance industry grew at a healthy pace of 35% on a year-on-year basis and 20% for FY23.
Life insurance firms collected 18% more premiums in FY23 compared to the year before. Life insurers collected Rs. 3.71 lakh crore (US$ 44.85 billion) as the first-year premium in FY23 as against Rs. 3.14 lakh crore (US$ 37.96 billion) in FY22, shows the latest IRDAI data.
Mr. Debashish Panda, Chairman, IRDAI informed that the insurance industry of India has become a Rs. 59 crore (US$ 7.1 million) industry as of February 2023.
Driven by a pick-up in health and motor insurance segments, the non-life insurance industry has grown by 16.4% in FY23 compared to 11.1% in the previous year.
In FY24 (Until January) Among the private players, SBI Life, HDFC Life and ICICI Prudential Life led the industry in premium collection. SBI Life collected Rs. 31,218 crore (US$ 3.76 billion) premium while HDFC Life and ICICI Prudential Life received Rs. 22,744 crore (US$ 2.74 billion) and Rs. 13,091 crore (US$ 1.58 billion), respectively.
As expected, the state-run insurance behemoth LIC alone contributed over 58.6% to the total new business premium collection. The insurer received close to Rs. 166,326 crore (US$ 20.02 billion) as premium in FY24 (Until January 2024).
According to the latest data released by the insurance regulator – the Insurance Regulatory and Development Authority of India - LIC improved its market share by 67.72% as of October, a gain of 447 basis points (bps). At the end of 2021-22, private players had a 36.75% share of the life insurance market, while LIC had 63.25%.
With nearly 62.58% of the new business market share in FY23, Life Insurance Corporation of India, the only public sector life insurer in the country, continued to be the market leader.
In FY23, non-life insurers (comprising general insurers, standalone health insurers and specialized insurers) recorded a 16.4% growth in gross direct premiums.
In India, gross premiums written off by non-life insurers reached US$ 10.95 billion in FY24* and US$ 31 billion in FY23.
In the financial year 2023, India's insurance premium penetration accounted for 4% of the GDP, with life insurance making up 3% and non-life insurance comprising 1%.
The penetration of Indian insurance industry was less than 5% of the GDP. IRDAI data shows that India’s insurance penetration was 4% of the GDP in 2022-23.
Premiums from India’s life insurance industry is expected to reach Rs. 24 lakh crore (US$ 317.98 billion)
The market share of private sector companies in the general and health insurance market increased from 48.03% in FY20 to 49.31% in FY21 to 62.5% in FY23.
According to S&P Global Market Intelligence data, India is the second-largest insurance technology market in Asia-Pacific, accounting for 35% of the US$ 3.66 billion Insurtech-focused venture investments made in the country.
Investments and Recent Developments
The following are some of the major investments and developments in the Indian insurance sector.
- In the fiscal year 2023-24, India's non-life insurance sector saw notable growth, driven mainly by health and motor insurance. Health insurance premiums exceeded Rs. 1 trillion (US$ 12.02 billion), reflecting a 20.2% increase, while motor insurance reached Rs. 91,781.3 crore (US$ 11.03 billion), growing by 12.9%.
- In April 2024, CCI has approved Axis Bank Limited's subscription to 14,25,79,161 equity shares of Max Life Insurance Company Limited.
- On January 2024, CCI has approved the merger of Shriram LI Holdings Private Limited (SLIH) with Shriram Life Insurance Company Limited (SLIC).
- As announced in November 2023, Zurich Insurance Group is set to acquire a majority stake in Kotak General Insurance, marking the first major foreign investment in India's insurance sector in eight years. CCI has approved acquisition of 70% stake by Zurich in Kotak Mahindra Company.
- As announced in June 2023, Go Digit Life Insurance, in which both HDFC Bank and Axis Bank have bought stakes, plans to invest Rs. 500-600 crore (US$ 60.3-72.4 million) in the initial 18 months to start out as the country's 26th life insurer.
- As informed in September 2023, the UK and India have agreed to launch a partnership to boost cross-market investment by the insurance and pension sectors.
- In August 2023, Tata AIA launched a ULIP plan with benefits of critical illness cover- Tata AIA Pro Fit.
- With the introduction of new private sector companies, the insurance sector in India gained momentum in the year 2000.
- India allowed private companies in insurance sector in 2000, setting a limit on FDI to 26%, which was increased to 49% in 2014 and further increased to 74% in the Union Budget (Feb’21).
- The market share of private sector companies in the non-life insurance market rose from 15% in FY04 to 49.3% in FY21.
- Private insurers like HDFC, ICICI and SBI have been some tough competitors for providing life as well as non-life products to the insurance sector in India.
- The IPO of Life Insurance Corporation (LIC) of India was the largest IPO ever in India and the sixth biggest IPO globally of 2022. As of November 2022, listing of LIC accounted for more than a third of resources mobilised in the primary equity market until November 2022.
- Insurance market in India is expected reach US$ 222 billion by 2026.
- Robotic Process Automation (RPA) and AI will occupy center stage in insurance, driven by newer data channels, better data processing capabilities and advancements in AI algorithms.
- Bots will become mainstream in both the front and back-office to automate policy servicing and claims management for faster and more personalized customer service.
- Insurers can now launch new health insurance products without IRDAI’s nod. Earlier the flexibility was given for group insurance products but now retail products have also come under the new norms.
- The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India.
- Bajaj Allianz Life Insurance, a private life insurer, has entered into a strategic partnership with City Union Bank, one of the oldest private sector banks in India. This partnership will help the private life insurer offer a wide array of life insurance solutions to the bank’s existing and future customers, across their 727 branches.
- In October 2022, Policybazaar's PBPartners launches its mobile app to facilitate the ease of insurance business for its advisors digitize their insurance business.
- Canara HSBC Life Insurance launched its ‘Canara HSBC Life Insurance App’ on the 75th Independence Day of India. The app, available on android, iOS devices and web portal, offers access to policy details, the option to receive timely alerts, pay the premium, and track fund value, among others.
- ICICI Lombard and Airtel Payments bank have entered into a partnership for providing cyber insurance in February 2022.
- Probus Insurance receives US$ 6.7 million in funding from a Swiss impact fund in December 2021.
- Companies are trying to leverage strategic partnership to offer various services as follows:
- In November 2021, ICICI Lombard collaborated with Vega to provide a personal accident insurance cover with every online Vega helmet purchase to increase road safety awareness among customers.
- In November 2021, ICICI Prudential Life Insurance partnered with NPCI Bharat BillPay, a subsidiary of National Payments Corporation of India (NPCI), to offer ClickPay feature to its customers.
- In November 2021, the Competition Commission of India (CCI) approved HDFC Life Insurance’s acquisition of 100% shareholding in Exide Life Insurance. The move is expected to strengthen HDFC Life’s position in South India.
- In November 2021, Willis Towers Watson acquired the remaining 51% shares in WTW India, taking the company’s holding in WTW India to 100%.
- In November 2021, Acko, a digital insurance start-up, raised US$ 255 million in funds, taking the company’s valuation to ~US$ 1.1 billion.
- In September 2021, ZestMoney raised US$ 50 million to enter new business opportunities in the insurance sector.
- In August 2021, PhonePe announced that it has received preliminary approval from IRDAI to act as a broker for life and general insurance products. As a result, the company can now offer insurance advice to its 300+ million users.
- In FY21, LIC achieved a record first-year premium income of Rs. 56,406 crore (US$ 7.75 billion) under individual assurance business with a 10.11% growth over last year.
- In FY23, non-life insurers (comprising general insurers, standalone health insurers and specialized insurers) recorded a 16.4% growth in gross direct premiums. In India, gross premiums written off by non-life insurers reached US$ 31 billion in FY23 and US$ 17.29 billion in FY24 (until September 2023), from US$ 28.14 billion in FY22, driven by strong growth from general insurance companies.
- In August 2021, ICICI Prudential Life Insurance tied up with the National Payments Corporation of India (NPCI) to provide a unified payments interface autopay.
Government Initiatives
The Government of India has taken number of initiatives to boost the insurance industry. Some of them are as follows:
- The Interim Budget for 2024-25 aims to enhance value addition in agriculture and boost farmers' income. It plans to increase investment in post-harvest activities, provide financial aid to 11.8 crore farmers also offered crop insurance to 4 crore farmers, and promote self-reliance in oilseeds.
- The Union Budget 2023-24 has proposed to limit the income tax exemption on the proceeds of high value life insurance policies. Mooted as part of an emphasis on better targeting of tax concessions and exemptions, the proposal means that income from life insurance policies with an aggregate premium up to Rs. 5 lakh (US$ 6,075) will be exempt from taxation.
- The government’s flagship initiative for crop insurance, Pradhan Mantri Fasal Bima Yojana (PMFBY), has led to significant growth in the premium income for crop insurance.
- Ayushman Bharat (Pradhan Mantri Jan Arogya Yojana) (AB PMJAY) aims at providing a health cover of Rs. 5 lakh (US$ 6,075) per family per year for secondary and tertiary care hospitalization.
- Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana was provided during FY23.
- In 2022, the Indian government plans to sell a 7% stake in LIC for Rs. 50,000 crore (US$ 6.62 billion). This is the largest initial public offering (IPO) in India.
- In November 2021, the Indian government signed an agreement with the World Bank for a US$ 40 million project to advance the qualities of health services in Meghalaya, including the state’s health insurance program.
- In September 2021, the Union Cabinet approved an investment of Rs. 6,000 crore (US$ 804.71 million) into entities, offering export insurance cover to facilitate additional exports worth Rs. 5.6 lakh crore (US$ 75.11 billion) over the next five years.
- In August 2021, the Parliament passed the General Insurance Business (Nationalization) Amendment Bill. The bill aims to allow privatization of state-run general insurance companies.
- Union Budget 2021 increased FDI limit in insurance from 49% to 74%. India's Insurance Regulatory and Development Authority (IRDAI) has announced the issuance, through Digi locker, of digital insurance policies by insurance firms.
- Under the Union Budget 2021, Finance Minister Ms. Nirmala Sitharaman announced that the initial public offering (IPO) of LIC will be implemented in FY22, as part of the consolidation in the banking and insurance sector. Though no formal market valuation has been undertaken, LIC’s IPO has the potential to raise Rs. 1 lakh crore (US$ 13.62 billion).
- In June 2021, the government extended a Rs. 50 lakh (US$ 66.85 thousand) insurance coverage scheme for healthcare workers across India until the next one year.
- In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into state-owned general insurance companies to improve the overall financial health of companies.
- Under Union Budget 2021, fund of Rs. 16,000 crore (US$ 2.20 billion) has been allocated for crop insurance scheme.
Road Ahead
The future looks promising for the life insurance industry with several changes in the regulatory framework which will lead to further changes in the way the industry conducts its business and engages with its customers. Going forward growing middle class, increasing awareness about the importance of insurance, and digital advancements, the sector is expected to expand further increasing life expectancy, favourable savings and greater employment in the private sector is expected to fuel demand for pension plans. Life insurance industry in the country is expected to increase by 14-15% annually for the next three to five years. The scope of IoT in Indian insurance market continues to go beyond telematics and customer risk assessment. Currently, there are 110+ InsurTech start-ups operating in India.
These startups are expected to provide a major boost to the industry and help increase India’s insurance penetration which plays a crucial role in the overall development of the country. In the past, the Indian government has played a crucial role in increasing the scope of the insurance sector through various policies and schemes. This trend will continue in the further through schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY) providing crop insurance and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) providing life insurance coverage to the youth at an affordable price.
Schemes like these coupled with India’s demographic factors such as a growing middle class, young insurable population, and growing awareness of the need for protection and retirement planning will support the growth of the Indian insurance sector.
Note: Conversion rate used for August 2024 is Rs. 1 = US$ 0.012,
References: Media Reports, Press Releases, Press Information Bureau, Interim Budget 2024, Insurance Regulatory and Development Authority of India (IRDA), Crisil, Union Budget 2023-24, Economic Survey 2022-23
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