India will continue to be one of the fastest growing life insurance markets with annual gross written premiums of Rs 2.68 lakh crore set to grow by 13 to 14 per cent and reach Rs 5.17 lakh crore by 2015, industry body ASSOCHAM said today.
The country will contribute 10 per cent of total global premium growth in this period and be one of the few major markets to grow at double digit rates. The life insurance industry grew by 28 per cent during 2000 and 2010 in new business premiums, 27 per cent in annualised premium equivalent (APE) and 25 per cent in gross written premiums, catapulting India to top ten markets globally.
“But the level of protection as measured by sum assured to GDP is about 55 per cent relative to benchmarks in developed markets of 150 per cent to 250 per cent,” said secretary general D.S. Rawat.
The relentless focus on growing new business premiums has led to several inefficiencies in business practices, he said. Creation of short-term products, incentivisation of front-line managers and agents primarily on new business and limited profiling of customer needs resulted in low levels of profitability.
Between September 2010 and March this year, the industry registered negative growth of 13 per cent in APE. In the private sector, the negative growth was even higher at 32 per cent. In the first quarter of 2011-12, the slowdown continued with the industry registering negative APE growth of 23 per cent and private sector registering negative APE growth of close to 40 per cent.
Going forward, the focus of industry will broaden beyond growth to include two important aspects which has been largely ignored in the past – providing long-term savings and protection to consumers, and driving profitability in the core life insurance business through sustainable business models.
Mr Rawat said the market is likely to witness continued regulatory action in line with trends which are being seen among regulators across the world. Secondly, the Indian consumer is evolving rapidly.
“Consumers are increasingly becoming multi-channel. Studies show over 80 per cent of consumers across Asia use more than one channel across the purchase and usage process – especially for buying insurance products.”
Non-life insurance market to reach Rs 90,000 crore by 2015
Driven by strong underlying demand tailwinds, the non-life insurance industry is estimated to grow at over 18 per cent till 2015 and reach a total size of Rs 90,000 crore from the current level of Rs 47,000 crore, apex chamber ASSOCHAM said today.
With this trajectory, India will be one of the fastest growing markets in Asia and globally – next only to China among major markets, said The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Motor insurance will continue to remain the largest category, contributing over 40 per cent of industry premiums. India will become the third largest car market globally by 2020 with over 70 lakh cars sold annually, driving growth in motor insurance.
On the other hand, total expenditure on healthcare will be Rs 20 lakh crore, creating significant opportunities for coverage through health insurance. “The health insurance segment will grow the fastest and account for close to 30 per cent of total industry premiums by 2015,” said secretary general D.S. Rawat.
Within health insurance, the government sponsored health schemes will grow the fastest while retail will emerge as the largest opportunity, he said.
The country’s infrastructure expenditure over the next five years is likely to be Rs 47 lakh crore, creating opportunities for insuring these projects. Engineering insurance coverage for new projects will be an important area of growth, leading to opportunities in segments like commercial lines.