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The Indian insurance sector is booming right now. There are 58 total insurance companies in the market which includes 34 non-life insurance providers. There are 25 general insurance companies, 7 standalone health insurance companies, and 2 specialised insurance providers. They have been growing at different rates over the past couple of years. These companies are considered to be some of the leading players in the country’s economy, dealing with both personal and corporate policies such as auto, home, accidental death and dismemberment, and life and general liability coverage

This article will offer a deep dive into the insurance sector of India. 

Life Insurance Companies Performance

Over the previous two decades, India’s insurance market has grown at an outstanding rate, owing to increased private sector engagement and improved distribution capacities, as well as significant advancements in operational efficiencies. 

Life insurance providers in India provided premiums from the new businesses of around INR 2.78 trillion (~USD 38 billion) in the financial year 2021-22, up by 7.49% from last year. At the same time, private insurance companies grew by around 16.29%. Private insurance companies contributed approximately 33.8% of the market’s new business premium in the financial year 2021-22, with the famous LIC (Life Insurance Corporation of India) accounting for the rest amount. 

In the financial year 2020-21, the Life Insurance Sector in India posted a gross premium amount of roughly INR 5.73 trillion (~USD 81.3 billion), which shows a 12.75% increase over the prior year, with private insurers accounting for around 33.7% of overall premium insured by the industry.

Non-Life Insurance Companies Performance

Along with life insurance providers, the non-life insurance sector has also shown tremendous growth over the years. Non-life insurance companies consisting of general insurers, standalone medical insurers, as well as speciality insurers increased overall direct premiums by roughly 5.19% in the financial year 2021-22.

In this same year, car insurance contributed to around 34.1% of the overall non-life insurance premiums collected, trailed by medical insurance at approximately 29.5%. Increasing demand for individual mobility access is contributing to a change in car ownership trends, which may present a chance for auto insurance companies. In the financial year 2021-22, GDPI for health insurance increased by 13.3%, whereas the GDPI for liability insurance and fire insurance increased by 16.4% and 28.1%, respectively.

The Past of the Insurance Sector in India

The insurance market in the nation has been quickly expanding, with overall insurance premiums rising at a rapid pace when compared to foreign peers. However, if you look at the past of the insurance industry in India, here are some previous challenges that are now being addressed:

  • Lack of Knowledge

This was by far the most significant reason for the insurance sector’s stagnation in India in the past. Because a large portion of the public is unaware of the features and benefits of insurance plans, many do not bother researching them or purchasing them when urged to. However, with the nation’s digitalisation and various carriers advertising their products online, individuals, particularly the underprivileged population, are becoming more familiar with insurance policies and, as a result, purchasing plans to cover themselves and their families.

  • Lack of Penetration

This goes hand-in-hand with the lack of insurance knowledge that was prevalent in the country. Insurance penetration can be defined as a measure of a country’s insurance sector’s potential and performance. It is computed as a proportion of total insurance premiums to the overall GDP. The insurance penetration in India increased from around 2.71% in the year  2001 to about 3.76% in 2019. However, when you match it with other Asian countries such as Malaysia, China, and Thailand, this expansion can be substantially lower. This is something which is actively being worked upon by the Indian government. 

The Present day scenario of the Insurance Sector in India

With the advent of technology, more customers are going digital for their insurance needs. The young generation understands the importance of insurance. In fact, it is most likely to get one to cover themselves and their families than the older generation. They are more aware of the importance of saving money. They know that unforeseen circumstances could arise at any time in life and increase their risk of financial ruin. The number of companies that provide you with the ability to purchase a policy online has grown substantially in recent years. This is largely due to the fact that it’s cheaper and easier than using traditional methods such as visiting a local insurance provider’s office and browsing through their catalogue of insurance solutions. 

Here are the recent trends in the Indian insurance market:

  • Standardised Products

A mix of technology and globalisation has ushered in an era of increased knowledge of pure risk coverage, and the desire for simple, no-frills propositions has undoubtedly aided the market’s growth in insurance penetration. Most insurance providers offer insurance brochures on their websites. Many people often consider the insurance brochure as an important part of any insurance policy. This is because the information provided in it was a sign that the policy was acceptable for use. It often contains details about the benefits and covers provided for the customer as well as other essential information related to the purpose of buying this type of policy.

  • Rising Web Aggregators

The insurance industry is one that’s traditionally overlooked in digital marketing. However, with the rising share of web aggregators within the online insurance space, insurance providers are now closer to the customers than ever. Web aggregators are now accounting for more than 30% of online digital origination in India. They have been a boon to consumers looking for information on their specific needs.

  • Wellness Products

In this competitive market, insurance companies are trying to ensure that they have a competitive edge over their competitors. This is why they are increasing the scope of their benefits. To promote their plans, insurers, mainly health insurance providers, are now providing wellness benefits to the policyholders. Policyholders can get a good amount of discount on their premiums by maintaining a proper health routine. Also, many companies are offering health coaches and other similar programs to help insured individuals get out of their bad healthcare routine.

Types of Life Insurance Plans offered by Indian Companies :

The COVID epidemic has boosted insurance penetration and raised insurance awareness. Along with that, it has improved the demand for insurance products, particularly health and life coverage. With this rising demand, the industry has witnessed a substantial increase in the number of policyholders all over the nation. Apart from that, with all new types of life insurance plans like TROP, child insurance plans and ULIP policies released, the life insurance sector of India has considerably expanded.

Types of Non-Life Insurance plans offered by Indian Companies :

The explosion of digitisation has made it easier for us to buy insurance in India. More companies are looking towards standardising their products and making them more user-friendly for the consumer’s convenience. Customers are buying a lot of these plans at higher rates than before. This has led people to start seeing what kind of policies are available. Apart from mandatory plans like auto insurance, other general coverages like liability and fire insurance demands have also increased by a significant margin.

Types of Health Insurance plans offered by Indian Companies :

Recently, the premium level and the number of subscribers in India’s health insurance business have increased. One of the primary factors would be the significant engagement of government-aided schemes. PM-JAY, among other government initiatives, are increasing insurance coverage in India. In addition, private health insurers have strengthened their attempts to broaden their coverage. Alongside, they feature specialised offerings for seniors as well as base insurance for the working sector.

The Future of the Insurance Sector in India

In the future, general insurance businesses will benefit greatly from economic liberalisation. This is particularly true as trade activity improves, expanding the market for vehicle and health insurance.

The insurance industry is growing as a result of:

  • Significant government efforts,
  • Strong democratic elements,
  • The favourable regulatory environment,
  • Greater collaborations,
  • Innovative products, and
  • Lively distribution networks.

Insurance and Automobile Sector :

The automobile insurance sector is likely to benefit from strong expansion in the automotive sector over the coming decade. Besides that, a steeper yield curve, along with lower short-term rates and rising long-term rates, will assist the life insurance industry.

Online issuance and digital channels are likely to rise further. Web aggregators’ participation in online insurance distribution has been steadily rising. Web aggregators presently source 30-40% of online insurance and this is only going to rise further. 

Scope of Insurance in India :

In conclusion, the Indian insurance sector is on a path of growth, transformation and profitability. The government initiatives, along with the recent developments in the key players and trends in the industry. They have helped to change the face of the industry. And all these will continue to increase enrolment, increase penetration and increase awareness among consumers.