The life and non-life insurance market in India is estimated to register a CAGR of around 7 per cent over the next five years.
India’s share in the global insurance market was a mere 1.92 per cent in 2018. Insurance penetration and density, which are the key performance indicators of the insurance industry, are especially low in India.
Further, there is a significant gap between insurance coverage and value. Insurance penetration (measured as the ratio of insurance premium paid and GDP of the country) in India, according to Economic Survey 2020-21, increased from 2.71 per cent in 2001 to a mere 3.76 per cent in 2019 — much below the global average of 7.23 per cent. The survey also highlighted that the penetration in India was particularly low for the non-life segment.
The IRDAI, since the onset of the Covid-19 pandemic, has been striving to reach insurance products and services to the people in the most convenient way possible.
The pandemic has changed the landscape of the Indian insurance industry in a big way. Over the last 10 months, business from the protection portfolio has leapfrogged. Insurance is gradually being seen as a pull, rather than a push, product. For the first time, customers are asking insurers about the right protection products that would meet their needs.
Digitisation has been the key pillar in the growth of the insurance ecosystem — from marketing and policy issuance to claim submission.
Also, the way people accepted digital processes has been commendable and was a driving factor behind the growth of the industry, especially the life and health sectors
The financial impact of Covid will take time to play-out and will be mostly (re)insurer specific. It is likely to depend on the circumstances of each enterprise — the classes and mix of business they underwrite, their pricing, policy wordings, and reinsurance coverages.
Falling equity markets and interest rates could put pressure on (re)insurers’ balance sheets.
The writer is GM at GIC Re