Non-life insurance industry projected to grow by 14-15% CAGR by FY37
The non-life insurance business is expected to increase by 14-15% in gross direct premium income (GDPI) until FY37. This projection was shared with finance ministry officials, during a meeting attended by CEOs of private sector general insurance companies, members of the General Insurance Council, and the Secretary of the Ministry of Finance's Department of Financial Services, Mr. Vivek Joshi.
The non-life insurance industry grew by 16.41% year on year in March 2023. However, general insurance penetration in India remains low, at 1% in FY21, compared to 3.4% in Taiwan and 5.2% in South Korea. CEOs in the industry ascribed this to a lack of awareness and stressed the role of digital technology in extending distribution channels.
The panel also highlighted the frequent Goods and Services Tax (GST) letters received by general insurance businesses. Faster dispute resolution and lower GST rates for health insurance policies were highlighted as essential for business expansion.
The importance of coordination between state governments and the Ministry of Road Transport and Highways in enforcing the Motor Automobiles Act was emphasised, considering that about 54% of automobiles in India are uninsured. According to a news release from the Ministry of Finance, expanded cashless services and uniformity of treatment charges have the potential to drive health insurance growth.
According to the Niti Aayog Health Insurance Report, almost 40 crore individuals in India lack health insurance. The deployment of a hybrid model that has features of both trust and insurance is projected to improve the health insurance market.
The panel also discussed the need to develop parametric and crop insurance in the medium term. Agriculture contributes to roughly 14% of the Indian economy and 42% of total employment. To address the rising frequency of natural disasters, insurance companies are supporting the use of parametric insurance, as well as establishing methods to cover the Micro, Small, and Medium Enterprise (MSME) sectors.
Finally, according to Deloitte's Insurance Fraud Survey 2023, 60% of Indian insurers saw an increase in fraud. As a precautionary step, the group suggested tying insurance fraud to CIBIL scores.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.