Indian Insurance Industry Overview and Market Development Analysis


Indian Insurance Industry Overview and Market Development Analysis

Indian Insurance Industry Overview and Market Development Analysis:


INTRODUCTION

The insurance industry of India has 57 insurance companies - 24 are in the life insurance business, while 34 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. There are six public sector insurers in the non-life insurance segment. In addition to these, there is a sole national re-insurer, namely the General Insurance Corporation of India (GIC Re). Other stakeholders in the Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims.

ICICI LOMBARD GENERAL INSURANCE

Currently, a leading private general insurer in India, ICICI Lombard started as a joint venture (JV) between ICICI Bank and Fairfax Financial Holdings in 2001. Over the years, it has grown rapidly along with India’s insurance industry.

The Gross Direct Premium Income (GDPI) of the company stood at Rs. 133.13 billion (US$ 1.89 billion) in FY20.

Company Website: https://www.icicilombard.com/

SBI LIFE INSURANCE

SBI Life Insurance was established in 2000 as a JV between SBI and BNP Paribas Cardiff and has become one of the leading life insurers in the country. The company has a range of life insurance and pension products which include individual and group products to cater to the insurance needs of diverse customer segments.

Gross Written Premium of SBI Life has increased at 23% y-o-y to reach Rs. 406.3 billion (US$ 5.76 billion) in FY20.

Company Website: https://www.sbilife.co.in/

HDFC STANDARD LIFE INSURANCE COMPANY

HDFC Standard Life Insurance Company was established in 2000 as a JV between Housing Development Finance Corporation Limited (HDFC Ltd) and Standard Life Aberdeen. It was the first private company to get a license from IRDAI in 2001. As of March 2019, the company was providing 38 individual and 11 group insurance products. After a strong period of growth, the company completed its initial public offer (IPO) in 2017. HDFC Life continues to benefit from its presence across the country with 414 branches and additional distribution touch-points through several partnerships. The partnerships comprise 265 bancassurance partners including NBFCs (Non-Banking Financial Companies), MFIs (Micro Finance Institutions), SFBs (Small Finance Banks), etc. and 39 partnerships within non-traditional ecosystems.

Currently, the company has the largest share in new business among private life insurers.

Company Website: https://www.hdfclife.com/

Market share of major companies in terms of Gross Direct Premium collected (FY15)

  • LIC
  • HDFC Standard Life
  • SBI Life Insurance
  • ICICI Prudential Life Insurance
  • Other

INSURANCE INDUSTRY REPORT

The life insurance industry is expected to increase at a CAGR of 5.3% between 2019 and 2023. India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1%. In terms of insurance density, India’s overall density stood at US$ 78 in FY21.

Premiums from India’s life insurance industry is expected to reach Rs. 24 lakh crore (US$ 317.98 billion) by FY31.

There are 24 life insurance and 34 non-life insurance companies in the Indian market that compete on price and services to attract customers, whereas there are two reinsurance companies. The industry has been spurred by product innovation and vibrant distribution channels, coupled with targeted publicity and promotional campaigns by insurers.

The market share of private sector companies in the general and health insurance market increased from 48.03% in FY20 to 49.31% in FY21. The gross first year premium of Life insurers increased by 6.94% in 2021-22 (until January 2022) to Rs. 2,27,188 crore (US$ 29.54 billion).

Premiums from new businesses of life insurance firms in India totalled US$ 81.7 billion in FY21, representing a 2.8% increase over FY20.

The sum insured for the life insurance industry grew at 25.50% in 2021-22 (until January 2022).

In September 2021, new premiums of life insurers registered 22.2% growth in September 2021, up from 2.9% in September 2020.

Between April 2021 and September 2021, gross premiums written off by non-life insurers reached Rs. 108,705.3 crore (US$ 14.47 billion), an increase of 12.8% over the same period in FY21.

In FY22*, premiums from new businesses of life insurance companies in India stood at US$ 20.7 billion and renewable premiums stood at US$ 53.7 billion.

In July 2021, non-life insurance premium stood at Rs. 20,171 crore (US$ 2.71 billion), an increase of 19.5% YoY, as compared with Rs. 16,885 crore (US$ 2.26 billion) in July 2020. The growth was driven by a strong performance from the health and motor segments.

In July 2021, standalone private health issuers registered a premium growth of Rs. 1,753 crore (US$ 235.11 million), an increase of 27.5% YoY.

Between April 2021 and January 2022, gross premiums written off by non-life insurers reached Rs. 227,188.89 crore (US$ 21.24 billion), an increase of 6.94% over the same period in FY21. In January 2022, the total premium earned by the non-life insurance segment stood at Rs. 21,957.03 crore (US$ 2.85 billion), as compared to the Rs. 21389.70 crore (US$ 2.77 billion) recorded in January 2021.

The gross direct premium income for the general insurance industry in India stood at Rs. 1,087 billion (US$ 14.62 billion) in FY22 (until September 2021), an increase of 12.3% YoY, due to 28.8% growth in the health segment and an 84.7% growth in the personal accident segment.

In March 2021, health insurance companies in the non-life insurance sector increased by 41%, driven by rising demand for health insurance products amid the COVID-19 surge.

The total benefit amount claimed from private life insurance companies was Rs. 5,725 crores (US$ 780 million), whereas LIC had a total benefit claim amount of Rs. 13,694 crore (US$ 1,866 million) in FY20. With such a huge base, LIC has performed well to maintain a settlement ratio of 96.69% by a number of policies and 93.45% by benefit amount.

Indian start-ups are also focusing on accelerating insurance reach to customers. For instance, in November 2021, vKover, an online platform, announced plans to recruit 10,000 agents in the next two years, in Kerala. The company plans to establish a network of 100,000 digital agents in India, by 2026.

Union Budget 2021 increased the FDI limit in insurance from 49% to 74%. India's Insurance Regulatory and Development Authority (IRDAI) has announced the issuance, through Digilocker, of digital insurance policies by insurance firms.

Under the Union Budget 2021, Finance Minister Ms Nirmala Sitharaman announced that the initial public offering (IPO) of LIC will be implemented in FY22, as part of the consolidation in the banking and insurance sector. Though no formal market valuation has been undertaken, LIC’s IPO has the potential to raise Rs. 1 lakh crore (US$ 13.62 billion).

In FY21, LIC achieved a record first-year premium income of Rs. 56,406 crore (US$ 7.75 billion) under individual assurance business with a 10.11% growth over last year.

In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into state-owned general insurance companies to improve the overall financial health of companies.

According to data from the Insurance Regulatory and Development Authority of India (IRDAI), 25 general insurance companies recorded a 10.8% increase in their collective premium in January 2021 to Rs. 16,247.24 crore (US$ 2.24 billion) compared with Rs. 14,663.40 crore (US$ 2.02 billion) in January 2020.

ICICI Lombard and Airtel Payments bank entered into a partnership for providing cyber insurance in February 2022.

Probus Insurance receives US$ 6.7 million in funding from a Swiss impact fund in December 2021.

In 2022, the Indian government plans to sell a 7% stake in LIC for Rs. 50,000 crores (US$ 6.62 billion). This is the largest initial public offering (IPO) in India.

In September 2021, ZestMoney raised US$ 50 million to enter new business opportunities in the insurance sector.

In August 2021, PhonePe announced that it has received preliminary approval from IRDAI to act as a broker for life and general insurance products. As a result, the company can now offer insurance advice to its 300+ million users.

In FY21, the motor third-party premium increased by 4.4% to Rs. 106.5 billion (US$ 1.4 billion) and is likely to expand in FY22.

In July 2021, non-life insurers’ premiums, which include general, standalone and specialised public-sector, recorded 19.46% YoY growth and reached Rs. 20,171.15 crore (US$ 2.71 billion) against Rs. 16,885 crore (US$ 2.27 billion) in the same month last year.

On July 1, 2021, the LIC introduced its Saral Pension Scheme, which is a non-linked, non-participating, single premium, individual immediate annuity plan.

In June 2021, Aditya Birla Sun Life Insurance announced the launch of a new Vision LifeIncome Plus Plan that will provide guaranteed regular income plus flexible bonus payouts to policyholders.

In May 2021, Max Life Insurance Co. Ltd. launched ‘Max Life Saral Pension’, a non-linked, individual immediate annuity plan.

In April 2021, the Life Insurance Corporation of India (LIC) collaborated with Paytm to facilitate digital insurance payments.

In April 2021, Bharti AXA Life Insurance announced a bancassurance partnership with Fincare Small Finance Bank to offer life insurance products to >26.5 lakh customers.

In April 2021, the Life Insurance Corporation of India (LIC) collaborated with Paytm to facilitate digital insurance payments.

In September 2021, the Union Cabinet approved an investment of Rs. 6,000 crore (US$ 804.71 million) into entities, offering export insurance cover to facilitate additional exports worth Rs. 5.6 lakh crore (US$ 75.11 billion) over the next five years.

Going forward, increasing life expectancy, favourable savings and greater employment in the private sector is expected to fuel demand for pension plans. Likewise, strong growth in the automotive industry over the next decade would be a key driver for the motor insurance market. Motor insurance accounted for 32.59% of the non-life insurance premiums earned, followed by health insurance at 28.9%, in November 2020.

The public and private sectors have been actively working towards crop insurance. For instance, in October 2020, the Andhra Pradesh rolled out free of cost crop insurance scheme for the state farmers while the Reliance General Insurance and SatSure partnered to launch the satellite-based crop monitoring and predictive analytics support for better risk management and to improve the efficiency of its crop insurance business operations. On January 13, 2021, Crop Insurance Scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY), completed five years of operations towards strengthening the risk coverage of crops for farmers of India.

*- New Business Premium Value is until October 2021, Renewable Premium Value in India is until March 2021 (FY21)