Overview & Market Development Analysis of Indian Insurance Industry

Eguaogie Eghosa
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Mar 15, 2022

There are 57 insurance firms in India. Life insurers account for 24 of the firms, while non-life insurers account for 34. The only public company among life insurers is the Life Insurance Corporation (LIC).

There are six public sector insurers in the non-life insurance sector. In addition, the General Insurance Corporation of India is the only national re-insurer (GIC Re). Agents (individual and corporate), brokers, surveyors, and third-party administrators who handle health insurance claims are among the other stakeholders in the Indian insurance sector.

Size of the Industry

In 2020, India's insurance market is anticipated to be worth US$ 280 billion.

Between 2019 and 2023, the life insurance industry is expected to grow at a 5.3% CAGR. In FY21, India's insurance penetration was 4.2 per cent, with 3.2 per cent for life insurance and 1.0 per cent for non-life insurance. In FY21, India's overall insurance density was $78.

The life insurance industry grew at a 5.8 per cent annual pace in the first half of FY22, compared to 0.8 per cent the previous year.'

In September 2021, life insurers' new premiums increased by 22.2 per cent, compared to 2.9 per cent in September 2020.

Non-life insurers wrote down Rs. 108,705.3 crore (US$ 14.47 billion) in gross premiums between April and September 2021, up 12.8 per cent from the same period the previous year. In October 2021, the non-life insurance market made a total premium of Rs. 17,679.98 crore (US$ 2.38 billion) up from October 2020's 15,906.71 crore (US$2.14billion).

In the general and health insurance market, private sector companies' market share climbed from 47.97 per cent in FY19 to 48.03 per cent in FY20. Private players had a 33.78 per cent market share in premium underwrote services in the life insurance industry in FY20.

Non-life insurance premiums in July 2021 were Rs. 20,171 crore (US$ 2.71 billion), up 19% YoY from Rs. 16,885 crore (US$ 2.26 billion) in July 2020. The health and motor industries contributed significantly to the growth.

The general insurance business in India earned Rs. 1,087 billion (US$ 14.62 billion) in gross direct premium income in FY22 (through September 2021), up 12.3% year on year, thanks to a 28.8% increase in the health segment and a 12.3% gain in the life segment.

Premium rise of Rs. 1,753 crore (US$ 235.11 million) was recorded in July 2021 by standalone private health issuers, representing a 27.5 per cent year-over-year increase.

The general insurance business in India earned Rs. 1,087 billion (US$ 14.62 billion) in gross direct premium income in FY22 (through September 2021), up 12.3% YoY, thanks to a 28.8% gain in the health category and an 84.7 per cent increase in the personal accident segment.

Six freestanding private-sector health insurance businesses saw a 66.6 per cent increase in gross premium in May 2021, to Rs 1,406.64 crore (US$ 191.84 million), compared to Rs 844.13 crore (US$ 115.12 million) the previous month.

The non-life insurance sector's health insurance companies grew by 41% in March 2021, owing to increased demand for health insurance products amid the COVID-19 rise.

Non-life insurer premiums, which comprise general, standalone, and specialized public-sector insurance, increased 19.46 per cent year on year in July 2021, reaching as high as Rs. 20,171.15 crores (US$ 2.71 billion), up from the previous month's Rs. 16,885 crore (US$ 2.27 billion).

According to data from S&P Global Industry Intelligence, India is the Asia-second-largest Pacific insurance technology market, accounting for 35 per cent of the country's US$ 3.66 billion insurtech venture investments.

Initiatives of the Government

The Indian government has made several steps to help the insurance sector grow, such as:

The Indian government and the World Bank inked a $40 million agreement in November 2021 to improve the quality of health services in Meghalaya, particularly the state's health insurance program.
The Union Cabinet approved an Rs. 6,000 crore (US$ 804.71 million) investment in companies in September 2021, to facilitate increased exports up to around Rs. 5.6 lakh crore (US$ 75.11 billion) over the next five years.
The General Insurance Business (Nationalisation) Amendment Bill was enacted into law by Parliament in August 2021. The law would allow state-owned general insurance firms to be privatized.
The General Insurance Business (Nationalisation) Amendment Bill was enacted into law by Parliament in August 2021. The law would allow state-owned general insurance firms to be privatized.
The FDI limit in insurance was increased from 49 to 74 per cent in the Union Budget 2021. Insurance firms can now issue digital insurance policies using Digilocker, according to India's Insurance Regulatory and Development Authority (IRDAI).
To strengthen the overall financial health of state-owned general insurance businesses, the Finance Ministry stated in February 2021 that it will inject Rs. 3,000 crore (US$ 413.13 million) into them.

The Next Step

With many improvements in the legislative framework, the life insurance industry's future appears bright, and it will continue to modify the way it does business and interacts with its clients.

By the end of 2020, the insurance business will have grown to a total value of US$ 280 billion. In the next three to five years, the country's life insurance business is predicted to grow by 14-15 per cent annually.

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