Indian Insurance Industry Overview & Market Development Analysis

Indian Insurance Industry Overview & Market Development Analysis

Indian Insurance Industry


The insurance industry in India has 57 insurance firms. 24 of them are operating in the life insurance industry and 34 are non-life insurers. 

In the life insurance sector, Life Insurance Corporation (LIC) is the only public sector entity. Six public-sector insurers are within the non-life insurance sector. 

Alongside these the sole national re-insurer. It is called General Insurance Corporation of India (GIC Re). 

Other players of the Indian Insurance market are the agents (individual as well as corporate) as well as surveyors, brokers and third-party administrators who handle medical insurance coverage.

Market Size

In India the overall amount of market value in the insurance industry is projected to reach US$ 280 billion by 2020.

The life insurance sector is projected to grow at a rate of 5.3 percent between the years 2019 until 2023. In India, the insurance market was estimated at 4.2 percent in FY21 with life insurance penetration of 3.2 percent and non-life insurance coverage at 1.0 percent. In terms of the insurance density, India's total density was US$78 in FY21.

In the first quarter of FY22 the life insurance industry has recorded a growth rate of 5.8 percent, compared to 0.8 percent in the same period in the previous year.

In September 2021 the rates for life insurance companies registered 22.2 percent growth in September 2021. This is up from 2.9 percentage in September 2020.

Between April 2021 and September 2021 the total amount of premiums written off by non-life insurance companies reached an amount of Rs. 108,705.3 million (US$14.47 billion). 14.47 billion) which is which is an improvement of 12.8 percent over the time frame in FY21. In October 2021, the total premiums earned from the non-life insurance segment was Rs. 17,679.98 billion (US2.38 billion). 2.38 billion) in comparison to the amount of Rs. 15,906.71 million (US2.14 billion). 2.14 billion) that was recorded in October of 2020.

The market share of private firms in the general and health insurance market rose from 47.97 percent in FY19 to 48.03 percent in FY20. In the insurance for life private players accounted for the market share of 33.78 percent in premium underwritten services during the year FY20.

For FY22* the premiums from the new ventures for life insurance firms in India were US$20.7 billion. The amount for renewable premiums was US$ 20.7 billion. The renewable premiums were US$53.7 billion. 53.7 billion.

As of July 20, 2021 the non-life insurance premiums were at the sum of Rs. 20171 million (US$2.71 billion). 2.71 billion) increasing by 19.5 percent YoY, contrasted with an amount of Rs. 16885 million (US2.26 billion). 2.26 billion) in July 2020. The increase was driven by the strong performance of motor and health segments.

The month of July in 2021 private health insurers reported an increase in their premium of Rs. 1753 millions (USUSD 235.11 million) which is the increase was 27.5 percent YoY.

The total direct premium revenue of the overall insurance market in India reached the sum of Rs. 1,087 billion (US14.62 billion) 14.62 billion) in FY22 (until September 2021) This is which is an improvement of 12.3 percentage YoY due to 28.8 percent expansion in the health sector and an 84.7 percent increase in the personal injury segment.

Six public sector health insurance companies recorded an increase of 66.6 percent in their average gross premium , which was 1,406.64 crore (US$ 191.84 million) in May 2021. 1,406.64 crore (US191.84 million) 191.84 million) in May 2021 in comparison to Rs. 844.13 billion (USUS$ 115.12 million) in the previous.

In March 2021, the number of health insurance companies operating in the non-life insurance market grew by 41%. This was fueled by the rising demands for health insurance due to the COVID-19 increase.

As of the month July 20, 2021 non-life insurance companies' premiums, which encompass standalone, general and specialised public sector, registered 19.46 percentage YoY growth. The premium increased to an amount of Rs. 20,171.15 million (US2.71 billion dollars) 2.71 billion) as compared to an amount of Rs. 16885 million (USdollars 2.27 billion) in the same month of last year.

As per S&P Global Market Intelligence data, India is the second-largest insurance technology market in Asia-Pacific making up 35% US$3.66 billion in 3.66 billion of venture capital focusing on insurtech made in the country.

Investments and Recent Developments

These are just a few of the biggest investment and development that have occurred in the Indian insurance industry.

Companies are attempting to leverage strategic partnerships to provide options of services, including:

On November 20, 2021 ICICI Lombard collaborated with Vega to offer a personal accident insurance coverage with every on-line Vega helmet purchase, to raise the awareness of road safety among customers.

On November 20, 2021 ICICI Prudential Life Insurance joined forces in partnership with NPCI Bharat BillPay, a subsidiary of the National Payments Corporation of India (NPCI) and offered ClickPay option for its customers.

In November 2021 in the year 2021, in November 2021, the Competition Commission of India (CCI) approved HDFC Life Insurance's acquisition of a 100 percent stake within Exide Life Insurance. This acquisition is expected to help strengthen HDFC Life's presence within South India.

The company acquired the shares in November of 2021. Willis Towers Watson acquired the remaining 51% of shares within WTW India, taking the total holding of the company of WTW India to 100%.

The company's November 20, 2021 earnings report shows that Acko the digital-based insurance startup has raised US$ 25 million in capital and raised the valuation of the company to USUSD 1.1 billion.

The company was founded in September of 2021. ZestMoney has raised USfifty million dollars to explore fresh business possibilities in the insurance industry.

On August 20, 2021 PhonePe declared that they was granted preliminary approval by IRDAI to be an agent for general and life insurance products. In the end, PhonePe is now able to provide insurance guidance to its over 300 million customers.

The FY21 financial year, LIC recorded a first year record premium profit of approximately Rs. 56,406 crore (US$7.75 billion). 7.75 billion) under the business of individual assurance with an increase of 10.11 percent increase over the previous year.

In India the country, the total written premiums of non-life insurance companies amounted to US$26.52 billion in FY21. 26.52 billion for the FY21 (between April 2020 to March 2021) up down from US26.49 billion in FY20. 26.49 billion for the FY20 (between April 2019 to March 2020) thanks to a an increase in the general insurers.

The month of August was 2021. ICICI Prudential Life Insurance was joined by the National Payments Corporation of India (NPCI) to create an autopay interface that is unified for payments.

On August 20, 2021 ICICI Lombard General Insurance provided extensive insurance coverage to remote-controlled aircrafts, including drone pilots. The product safeguards the drone, and its payload (camera/equipment) that is attached to it, from theft, loss or damage, and also third-party liability.

On July 20, 2021 MedPay is a B2B company based in Bengaluru. technology start-up, created an API infrastructure to connect healthcare service providers as well as standalone clinics, pharmacies as well as insurance companies by way of MedPay's MedPay Connected Care Network (CCN).

The Bharti Life Insurance announced the renewal rate of 10% rise of. 1,498 crore (US200.64 million). 200.64 million) for FY21.

On June 20, 2021 LIC Housing Finance announced plans to raise Rs. 2,334.69 crore (US$312.43 million). 312.43 million) by way of a preferential issue of shares in equity to Life Insurance Corporation of India (LIC).

The 1st of July, 2021 the LIC launched the Saral Pension Scheme that is a non-linked single premium, non-participating annuity for individuals.

On July 20, 2021 Gallagher revealed plans to buy 100% of the Indian company Edelweiss Gallagher Insurance Brokers.

On June 20, 2021 Aditya Birla Sun Life Insurance announced the launch of a brand new Vision LifeIncome Plus Plus Plan which will guarantee regular income, as well as bonuses that are flexible to policyholders.

On June 20, 2021 Wardwizard Group ties up with Bajaj Allianz to offer insurance policies for Joy e-Bike customers.

On May 20, 2021 Max Life Insurance Co. Ltd. announced Max Life Saral Pension an individual, non-linked immediate annuity program.

In March 2021 health insurance companies operating in the non-life insurance market grew by 41%, fueled by the increasing demand for health insurance due to the COVID-19 increase.

On February 20, 2021 Bharti AXA General Insurance introduced its Health AdvantEDGE health insurance program that provides a complete insurance coverage against the rising costs of medical needs and other health facilities.

The 20th of February in the year 2021 ICICI Lombard General Insurance is a non-life insurance company within the private sector was granted permission from the International Financial Services Centre (IFSC) to set up the IFSC Insurance Office (IIO) in GIFT City in Gandhinagar, Gujarat.

Government Initiatives

It is the Government of India has taken several initiatives to improve the insurance sector. Some of them are listed below:

In November 2021 in the year 2021, the Indian government reached an agreement with the World Bank for a US$40 million project to enhance the quality of health care services in Meghalaya and the health insurance program of the state.

In September 2021 in September 2021, The Union Cabinet approved an investment of Rs. 6 crore (US$804.71 million) 804.71 millions) into entities, providing export insurance coverage to allow additional exports in the amount of the sum of Rs. 5.6 lakh crore (US75.11 billion). 75.11 billion) in the coming five years.

The 2021 session of House of Representatives approved the General Insurance Business (Nationalisation) Amendment Bill. The bill is designed to allow the privatisation of general insurance companies run by state companies.

The Union Budget 2021 raised the insurance FDI limits from 49 percent to 74 percentage. The Indian Insurance Regulatory and Development Authority (IRDAI) has made public the issue, through Digilocker digital insurance policies from insurance companies.

In the Union Budget 2021, Finance Minister Nirmala Sitharaman declared that the first public offer (IPO) for LIC will take place in FY22 as part of the consolidation process in the insurance and banking sector. While no formal market valuation has been conducted yet, the LIC's IPO could generate the sum of Rs. 1 crore (US$1.62 billion). 13.62 billion).

On June 20, 2021 the Indian government announced an amount of in June 2021, the government extended a. 50 lakh (US$ 66.85 thousand) insurance plan to health workers across India for the following year.

In February 2021 in February 2021, in February 2021, the Finance Ministry announced to infuse the sum of Rs. 3000 million (US$413.13 million) 413.13 millions) into general insurance companies that are owned by the government to improve the financial health of the companies.

In the Union Budget 2021, fund of approximately Rs. 16,000 crore (US$ 2.20 billion) is allocated to the insurance scheme for crop production.

Road Ahead

The future looks bright in the insurance industry , with many changes in the regulation that could result in further changes to how the industry operates and interacts with its customers.

The total insurance market is projected to grow to US$ 28 billion by the end of 2020. Life insurance in the country is anticipated to grow by 14-15% per year for up to the following three or five years.

The application of IoT in the Indian insurance market is continuing to extend beyond telematics as well as risk assessment for customers. There are currently more than 110 InsurTech companies working in India.

The demographic factors like the growing middle class, an insurable young population and a growing awareness of the necessity for retirement protection will boost the growth of Indian life insurance.

Note: The conversion rate used to calculate November 2021's value is. 1. US$ 0.013 * the New Business Value will last until October 2021. renewable premium value in India is till the end of March in 2021 (FY21)

References: Media Reports, Press Releases, Press Information Bureau, Union Budget 2021-22, Insurance Regulatory and Development Authority of India (IRDA), Crisil

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Nadeem Khan
M.Com, MBA
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