Insurance

The insurance sector is one of the most promising sectors in India today. The market size went up to US$ 47.89 billion in 2007, from US$ 21.71 billion in 2000, showing an increase of 120 per cent. Between 2000 and 2007, overall premiums sustained an average growth rate of 11.96 per cent and the compound annual growth rate (CAGR) growth was 11.96 per cent. This was one of the most steady growth patterns witnessed amongst emerging economies in Asian as well as global markets.

With the largest number of life insurance policies in force in the world, the penetration of insurance in India as a percentage of gross domestic product (GDP) stood at 4.8 per cent, as on February 2008, against 1.2 per cent in 1999–2000. Of this, life insurance accounted for 4.1 per cent and non-life insurance for 0.6 per cent.

Growth of private insurance companies

A report - 'Insurance Sector Futuristic Growth'—released in August 2008, by ASSOCHAM revealed that bolstered by intense marketing strategies, private insurance players have rapidly increased their market share. The share of state-owned insurance companies like General Insurance Corporation (GIC), Life Insurance Corporation (LIC) and others have come down to 70 per cent in last 4–5 years from over 97 per cent. It is estimated that its growth rate could even exceed 140 per cent. State-owned insurance companies have been suffering due to the limited number of policies on offer, while private insurance companies have a larger number of policies on offer, with more competitive premium amounts and maturity periods. The private sector insurance players have now also stepped into the rural markets in which, till recently, was dominated by the state-owned companies.

Private insurance companies have innovated with customised policies for different sections. For instance, an increase in the number of working women has led to a demand for life insurance policies, which in turn has helped women through a micro-entrepreneurship initiative (women have flexibility - managing home and being financially independent as distributors of insurance).

Children's products such as ICICI Prudential Life's 'SmartKid', Birla Sun Life's 'Children's Dream Plan', or HDFC Standard 'Life's Young Star Plus', are on a consistent growth path. According to industry estimates, currently, 20–30 per cent of business of many companies comes from children-specific insurance policies alone.

Simultaneously, many Indian companies are venturing abroad to diversify and increase their global presence.

Life Insurance

India is the fifth largest life insurance market in the emerging insurance economies globally and the segment is growing at a healthy 32-34 per cent annually. The Indian life insurance market is growing rapidly and from having a single company a decade ago, there are 18 active players in the market today. According to a report by research firm RNCOS—'Booming Insurance Market in India (2008-2011)'—the total life insurance premium in India is projected to grow to US$ 259.72 billion by 2010–11. The booming market has propelled the Indian life insurance agents into the 'top 10 country list' in terms of membership to the Million Dollar Round Table (MDRT) - a select club for the best performing life insurance agents.

The total life insurance market premiums is likely to more than double from the current US$ 40 billion to US$ 80 billion–US$ 100 billion by 2012, says a study by McKinsey. The study titled 'India Insurance 2012: Fortune Favours the Bold,' expects a rise in premiums between 5.1 and 6.2 per cent of the GDP in 2012 from the current 4.1 per cent driven by greater insurance intensity per capita as the average per capita income increases and rise in penetration in urban and rural areas.

General Insurance

The general insurance sector is likely to grow at a rate of 18 per cent in 2008, compared to 13 per cent in 2007. The general insurance sector's market size is likely to grow from the present US$ 7 billion to US$ 7.7 billion. During 2007–08, the general insurance sector grew at 12.53 per cent.

The 17 major non-life insurers collected a total of US$ 840.27 million as premium in April 2008, as against US$ 734.57 million premium collected in the corresponding period last year, recording a growth rate of 14.39 per cent. Private players continued to grow faster than the public sector players with a growth rate of 23 per cent, thereby increasing their share to 43.91 per cent in total premium collections. With the market players increasing their product lines to meet the growing demand, the growth momentum of the non-life insurance business is likely to continue, as per the credit rating agency ICRA.

The urban market is the major contributor of the general insurance industry. The sector needs to grow by 25 to 30 per cent to increase its low penetration level of 0.65 per cent. However, with the rural market registering a rapid growth rate, the general insurance industry growth is expected to increase to18 per cent this year.

In 2007–2008, the public sector could increase its premiums by just 3.94 per cent, 13 private sector players clocked premium growth of 28.85 per cent. The current fiscal has continued to maintain the growth momentum of the Indian general insurance industry. Private sector players' market share has grown to about 40 per cent in FY 2008 as compared to the public sector's 60 per cent.