indian insurance industry - industry overview and performance - part - 1

Industry Overview and Performance

Part 1

Indian Insurance Industry: Reaching out to Exponential Growth

Industry Overview

From Insurance being seen as a basic protection instrument against expected losses, the Indian Insurance industry has surely come a long way to become an absolute critical driver of economic prosperity and growth. The sector has helped account for risks; provide funds for capital intensive national building efforts besides lending social security to the citizens. Over a period of decade and a half, the industry has witnessed phases of spurt growth and moderation, intensifying competition and expansion of customer and geographic coverage.

Industry Overview

In terms of total premium, the insurance industry in India grew by 5.3% during the period 2014-15. Structurally, the Indian insurance industry consists of 52 insurance companies of which 24 are in life insurance business and 28 are non-life insurers. This also substantiates the two broad categories under Insurance sector i.e. Life and Non-Life or General. Of the 53 companies presently in operation, eight are in the public sector - two are specialized insurers, namely ECGC and AIC, one in life insurance namely LIC, four in non-life insurance and one in reinsurance. The remaining forty five companies are in the private sector

Industry Overview

Overall the industry is governed by IRDA which comes under the purview of Ministry of Finance.

Global Performance Backdrop

The global and Indian insurance industry have followed a similar trend of moderation amidst movement of interest rates (impacting margins), soft pricing conditions in the non-life sector and frequent regulatory reforms. However, the current under- penetration of Indian market provides massive headroom for organic growth, now backed by rising consumer confidence Index (Source: Nielsen Survey), strong economic fundamentals (Source: CSO Forecasts) and highly favorable demographic attributes.

Global Performance Backdrop

Against the global backdrop of improved consumer and business environment, insurance sector picked up good pace in 2014-15 having grown Total direct premium by 3.7 per cent against 1.4 per cent for the previous year (Source: Swiss Re, Sigma).The Indian Insurance sector was no different. India ranked 11 in Life Insurance Business and 20th in Non-Life Insurance Business among the 88 countries, for which data is published by Swiss Re. India’s share in global life insurance market was 2.08 per cent against 0.69 per cent in global non-life insurance premium in 2014. This indicates huge opportunity to grow. Globally, Switzerland leads on insurance density and Taiwan on penetration. Taiwan has the largest Life Insurance penetration, US is most penetrated in Non-life segment as per Swiss Re Sigma Report 4/2015.

Performance Overview

Penetration & Density The measure of insurance penetration and density reflects the level of development of insurance sector in a country. While insurance penetration is measured as the percentage of insurance premium to GDP, insurance density is calculated as the ratio of premium to population (per capita premium). During the first decade of insurance sector liberalization, the sector has reported consistent increase in insurance penetration from 2.71 per cent in 2001 to 5.20 per cent in 2009. However, since then, the level of penetration has been declining reaching 3.3 per cent in 2014. A similar trend was observed in the level of insurance density which reached the maximum of USD 64.4 in the year 2010 from the level of USD 11.5 in 2001. During the year under review 2014, the insurance density was USD 55.0.


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Premium Life insurance industry recorded a premium income of INR 3,28,101 crore during 2014-15 as against INR 3,14,302 crore in the previous financial year, registering growth of 4.39 per cent (9.44 per cent growth in previous year). Private sector took most of the growth in the premium income at 14.32 percent (1.33 per cent decline in previous year). LIC recorded 1.15 per cent growth against 13.48 per cent registered in the previous year. Corresponding shift in market share was observed with Private sector players moving to 26.95 per cent in 2014-15 (up about 2 points from last year’s 24.61 percent)


6. Start-up India Action plan : Ease of doing business, taxation, access to capital for MSMEs and skilling. 7. Employee Pension Scheme CRISIL believes the government's proposal to pay the Employee Pension Scheme contribution of 8.33 per cent for all new employees enrolling in the Employees' Provident Fund Organisation for the first three years of their employment is a big incentive for MSMEs.


The non-life insurance industry underwrote total premium of INR 84,684 crore in India for the year 2014-15 as against INR 77,554 crore in 2013-14. This represented a growth of 9.19 per cent as against an increase of 12.13 per cent recorded in the previous year. The public sector insurers exhibited growth in 2014-15 at 10.23 per cent; over the previous year’s growth rate of 10.21 per cent. The private general insurers registered growth of 9.62 per cent, which is lower than 14.52 per cent achieved during the previous year.


ICICI Lombard continued to be the largest private sector non-life insurance company, with market share of 7.89 per cent in the current year. Bajaj Allianz, the second largest private sector non-life insurance company, reported increase in market share from 5.82 per cent in 2013-14 to 6.18 per cent during the year under review. In case of public sector non-life insurers, all four companies expanded their business with an increase in respective premium collections. New India at 14.88 per cent share continued to lead, followed by National Insurance (13.28 per cent) and United India Insurance (12.62 per cent).


The Motor business continued to be the largest non-life insurance segment with a share of 44.14 per cent followed by Health at 27 per cent.

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