The Insurance Regulatory and Development Authority (IRDA) of India has increased the sector specific exposure limit for investments by insurers to 20 per cent of the total investment, from 15 per cent. The future of the Indian insurance sector looks bright. The sector which stood at a strong US$ 72 billion a few years back has the potential to grow to US$ 280 billion by 2020. This growth is driven by India's favourable regulatory environment which guarantees stability and fair play. Health insurance is an important segment in this sector. Currently, it caters for 10 per cent of the overall US$ 30 billion healthcare expenditure in India. The life insurance segment contributes about 4 per cent to India's gross domestic product (GDP) in terms of total premiums annually. There are 23 private companies in the segment. The state-owned Life Insurance Corporation (LIC) dominates the field, with about 71 per cent of the market share, according to Insurance Regulatory and Development Authority (IRDA).
Indian insurance companies collected a combined Rs 107,010.7 crore (US$ 16.85 billion) worth of new premiums for FY 2012-13, according to data released by IRDA. Meanwhile, the general insurance industry grew by 19.6 per cent in April-May period of FY 2013-14. Non-life insurers collected premiums worth Rs 13,552.46 crore (US$ 2.13 billion) in the first two months of 2014, as compared to Rs 11,333.54 crore (US$ 1.78 billion) during the corresponding period of the previous year.
Aviation insurance is likely to emerge as an important segment in the near future with new players in the market operations and existing players seeking to increase fleet size, according to industry officials. At present, the current market size of aviation insurance hovers around Rs 500 crore (US$ 78.76 million), a figure that is almost certain to grow as the industry develops further.
The insurance business in India is projected to reach Rs 4 trillion (US$ 63.01 billion) in FY 2013-14, according to IRDA. Total premiums collected by the general and the life insurance industry in FY 2012-2013 amounted to Rs 3.75 trillon (US$ 59.07 billion). The insurance penetration in India has the potential to rise to 5-6 per cent from the current 3.86 per cent.
Life Insurance Council, the industry body of life insurers in the country, has projected a compounded annual growth rate (CAGR) of 12-15 per cent over the next five years for the segment. India's insurable population is expected to grow to 750 million by 2020, with life expectancy projected to reach 74 years around the same period.
Confederation of Indian Industry (CII) projects the growth rate for India's insurance industry in FY 2013-14 to be around 5 per cent. It also anticipates 60 per cent of non-life insurance companies to record an average growth of more than 10 per cent. The raising of the foreign direct investment (FDI) limit from 26 per cent to 49 per cent in the sector is viewed as a key element to promote the insurance industry in India.
INDIAN INSURANCE INDUSTRY AT A GLANCE IN 2013 - 2014 