As Indians grow richer and save more for retirement, the distribute of the Indian life insurance industry has improved in world markets. India’s ranking between life insurance markets has risen from number 10 last year to the number 9 position, displacing Taiwan.
When life insurance industry was opened for contest in 2000, India ranked number 20 among life insurance markets and accounted for a mere 0.5% per cent of the world premium. 10 years on, the share has better to 2.45% per cent, overtaking developed markets in the West such as Spain, the Netherlands, Switzerland, Sweden Belgium, Ireland and Finland, South Africa Australia and Canada.
According to Swiss Re’s annual study of world insurance markets on a price rises-adjusted basis, global insurance premiums contracted by 1.1% per cent to $4.06 trillion in 2009. This is a development over 2008 when global premiums shrank 3.6% per cent. Life premiums fell 2% per cent to $2.33 trillion in 2009 while non-life premiums remained flat at $1.73 trillion.
“In most countries (66%), insurance grew faster than GDP, which shows the robustness of the industry. As credit and stock markets recovered in 2009, the industry was able to restore its capital base. Investment results and overall productivity also improved. For 2010, it is expected that the overall premium growth in the industry will turn positive and profitability and balance sheets will continue to improve,” Swiss Re said in its World Insurance 2009 report.
The major drop in market share has been witnessed by the United States, which accounted for over 29% of world premium in 2000, but now has only 21% per cent of world life insurance premium. Japan too has seen its share drop from 26.4% per cent to 17.2% per cent. An interesting feature of the life insurance business in India is that it has developed significantly faster than the gross domestic product.
The level of insurance penetration (insurance as a percentage of GDP) in India at 4.6% per cent is dual the insurance penetration levels in China (2.3%). The report shows that adjusted for price rises, India’s life insurance industry grew 10% per cent to Rs 2,73,604 crore.
Those within the industry say the life insurance has grown mostly because individuals are channelising retirement savings through insurance because other savings instruments are not that well developed. According to insurers, the Indian market is not yet a mature market, which is reflected in the low levels of premium paid towards protection.
When it comes to non-life insurance, where premium is paid purely of protection (health, auto and property), India ranks 26th and its share of world insurance market is 0.46% per cent.
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