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India Insurance Industry Growth in Last Few Years
India Insurance Industry Growth in Last Few Years
consistent growth rate of late and its present worth is 41 billion US dollars.
The industry has of late achieved a yearly growth rate within 32 and 34 percent and this makes it the 5th best
among emerging economies around the world. The various entities of the industry are also bringing out newer
products on a regular basis to attract their customers.
As per rules, the upper limit of foreign direct investment permitted in this sector is 26 percent. However, this
has to be done through the automatic route and the investor needs a license from Insurance Regulatory and
Development Authority (IRDA).
At present there are 22 life insurers in India. The IRDA has recently taken away the tariffs of the interest rates
and this has provided insurers greater independence when it comes to deciding the price of their insurance
policies. The insurance industry has also become more competitive as a result.
As per IRDA data, in April-August 2010 the insurance companies earned $11.73 billion in new premium - in
the corresponding period in the previous year the amount stood at 6.9 billion dollars.
LIC, a state held insurer, had been the biggest profit maker at that time with an addition of 88% to their
existing business. The privately owned insurers together had seen a leap of 34% to their policy sales.
ICICI Prudential earned 576.60 million dollars at that time. During April-August 2009 SBI Life had earned
$379.20 million in sales of new policies and that figure went up to $531.87 million in the corresponding period
in 2010 making it an increase of 40%. HDFC Standard Life also experienced a good growth of 54% in new
sales.
IRDA data shows that between April and October 2010 the general insurance industry experienced a year-on-
year growth of 22.76% with regards to underwritten gross premium.
The total value of that premium was 5.29 billion dollars while the same figure stood at $4.31 billion in April-
October 2009. For the public sector companies the year-on-year growth rate was 21.09 percent between April-
October 2010 and April-October 2009.
In the same period the privately held insurers saw an increase of 25.19 percent in terms of premium collected.
Among the publicly owned entities, New India Insurance was one of the better performers with a premium
income of 916.77 million dollars in April-October 2010.
At the same period in 2009 they had earned 770.25 million dollars which implies a growth rate of 19.04%. The
IRDA Summary Report of Motor Data of Public and Private Sector Insurers 2009-10 states that in the same
period almost 28.4 million policies were sold and the aggregate worth of premium collected was $2.31 billion.
The health insurance sector, according to the RNCOS' research report named "Booming Health Insurance in
India" posted unprecedented growth rates in 2008-09 and 2009-10. The report also estimates that between the
2009-10 and 2013-14 the sector would see a compound annual growth rate (CAGR) of at least 25%.
ICICI 10%
SBI 5%
Bajaj 4%
Reliance 5%
HDFC 6%
Birla 4%
Tata 2%
Met Life 1%
Kotak 2%
Others 8%
LIC 20404281
IndiaFirst 38498
Aviva 100216
Between 2005 and 2010 the yearly GDP growth was approximately 8.56%
At the same time, the ratio of gross savings to GDP was 33%
Middle class saw the quickest growth
The life expectancy rate of people went up and urban development happened at almost 54%.
In 2010 rate of premium growth came down to 4.2% and compared to global standards the premium share
was pretty low
Major operational issues for insurers were expenditure control, claims settlement procedures, improving
investment yields, and capital requirements
In the 2010-11 fiscal the life insurance industry grew by 4.20% while the general insurance industry
increased by 8.10%.
During that time the paid-up capital (private total) for the life insurance sector was INR 236.57 billion while
the paid-up capital (industry total) was INR 236.63 billion.
In 2010-11 the paid-up capital (private total) for the general insurance sector was INR 39.56 billion while the
paid-up capital (industry total) was INR 67.06 billion.
In 2010-11 the operating costs of privately owned life insurers was INR 159.62 billion while the total life
insurance industry expense was INR 329.42 billion.
In the same time the privately owned general insurers spent INR 39.32 billion from an industry total of INR
106.20 billion.
In 2010-11 the privately held life insurers paid benefits and claims worth INR 312.51 billion while the
industry aggregate was INR 1425.24 billion.
At the same time the private general insurers paid benefits and claims worth INR 99.37 billion while the
industry total was INR 295.36 billion.
India insurance industry composition
As per IRDA, the composition of the Indian insurance industry by March 2011 could be mentioned as such:
General insurance
Life insurance
General insurance
Product Percentage
Engineering 4
Motor OD 27.63
Motor TP 14.94
Health 22.58
Aviation 1.08
Liability 2.40
Fire 10.91
Marine 5.97
Others 7.37
Life insurance
Product Percentage
Non linked life individual 21.70
Riders 0.01
They have ruled out possibilities that the sector can contribute 10% to India's GDP. The Chairman of IRDA,
Hari Narayan has ruled out any such possibility asking if India's GDP growth will be that much in the next few
years ahead.
The IRDA states that in India land and gold are more preferred as forms of investment. Narayan feels that if
the insurance sector is to do well in terms of contribution to GDP then more people should be convinced about
its capability to provide good ROI (return on investment).
Yet another reason for the growing popularity of insurance policies is the benefit of tax exemption that is
provided to family oriented and individual plans. Majority of the private insurers also provide lucrative returns
and are now being availed by a section of the Indian society with greater disposable earnings.
There is an aspect of psychological comfort attached to the insurance policies as well - whenever an insurance
is availed the policyholder can be more or less assured of a safe future for that particular part of his or her life.
Company Product
Reliance General Insurance Reliance Private Car Insurance Reliance Travel Care for Students
The insurance industry is highly competitive as individual agents and companies compete with
one another for a larger portion of the market share. The Bureau of Labor Statistics expects
average growth in the insurance industry in terms of the number of new jobs that will be created
between 2008 and 2018. With minimal growth to look forward to, insurance agents and
companies will have to differentiate themselves in the marketplace by meeting a number of
critical success factors.
Financial Strength
In the aftermath of the recession that started in 2007, it is critical for insurance companies to
exhibit financial strength in an increasingly tough economic climate. Financial strength assures
consumers that they are making financially responsible investment decisions. Financial strength
entails having strong quality assets, the ability to raise long-term capital, adequate money
reserves, a proven risk-management strategy and high ratings given by companies or
organizations that assess financial strength.