The insurance industry will continue to outpace the rapid economic growth to reach $350-400 billion in premium income by 2020, making India amongst the top three life insurance markets and top 15 non-life insurance markets by the year, a study said.
It stated that the total penetration of insurance (premium as percentage of GDP) has increased from 2.3 per cent in 2001 to 5.2 per cent in 2011. In addition, there has been a vast increase in the coverage of insurance.
“The number of life policies in force has increased nearly 12 fold over the past decade and health insurance, nearly 25 fold,” according to a Ficci and the Boston Consulting Group (BCG) report titled ‘India Insurance — Turning 10, Going on 20’.
This progress has been aided by the dramatic shift in the availability of products, for example: better term, ULIPs, whole life, maximum NAV guarantee, auto assistance, auto pay per km insurance, disease management and wellness.
aid Rajiv Kumar, director general, Ficci, “The report estimates the total insurance premium at approximately Rs 17 lakh crore to Rs 22 lakh crore in 2020 (with life being Rs 15 lakh crore to Rs 20 lakh crore). This massive growth will have a significant impact on India’s ranking in the global insurance industry and is based on strong fundamentals.”
“While the industry has come a long way over the past decade, the big challenge with the industry is profitability. Private life insurers have accumulated losses of over Rs 16,000 crore till March 2010. Similarly, the non-life industry has cumulative underwriting losses of nearly Rs 30,000 crore,” said Alpesh Shah, partner & director, BCG India and author of the report.
The report highlights the importance of insurance in India’s economy, the progress made in the last decade, key challenges associated with the sector and an action agenda for insurance companies and the government,” said Sandeep Bakhshi, chairman, Ficci’s insurance and pensions committee and managing director & CEO, ICICI Prudential Life Insurance Co Ltd.
Progress has been made on the channel front with the emergence of five distinct channels — bancassurance, broking, corporate agency, direct and auto dealers to complement the existing third-party agency and in-house salaried sales force.
“Along with the emergence of multiple channels, the distribution reach has increased manifold, nearly 6-fold for life, and 1.5 times for non-life. During the same time, the Indian market has evolved from a monopoly to a truly competitive market,” the study said.
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