India’s Insurance Sector-New Possibilities

Introduction

The total market size of the insurance sector in India was US$ 66.4 billion in FY 13. It is projected to touch US$ 350-400 billion by 2020.The life insurance premium market expanded at a CAGR of 16.6 per cent from US$ 11.5 billion to US$ 53.3 billion during FY 03-13. The non-life insurance premium market also grew at a CAGR of 15.4 per cent in the same period, from US$ 3.1 billion to US$ 13.1 billion.

Policies and Regulations

Union Budget 2014-15 increased the FDI limit of insurance to 49 per cent. The increase in the FDI limit can help the insurance industry in two ways.

• help companies access capital more easily and, two
• act as a trigger for listing of insurance players

In addition to this a high panel committee has been set up to analyze various methods which could create alternate methods of insurance policy purchases apart from broking.

Policy @ONLINE-A alternative

Boston Consulting Group (BCG) and Google India forecasts that insurance sales from online channels will grow 20 times from present day sales by 2020, and overall internet influenced sales will touch Rs 300,000-400,000 crore (US$ 49.63-66.18 billion).The reason for same is high internet penetration and most of the target customers are accessing internet on either laptops or smartphones.The convenience in purchasing a policy online is much more as compared to traditional process.In addition to this it saves lot of paper(green initiative).

Future Trends

India’s insurable population is anticipated to touch 75 crore in 2020, with life expectancy reaching 74 years. Life insurance is projected to comprise 35 per cent of total savings by the end of this decade, compared to 26 per cent in 2009-10.In a bid to facilitate banks to provide greater choice in insurance products through their branches, a proposal could be made which will allow banks to act as corporate agents and tie up with multiple insurers.

Investment corpus in India’s pension sector is projected to cross US$ 1 trillion by 2025, following the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013, as per a joint report by CII-EY on Pensions Business in India.This is a major area of interest for insurance sector as unlike other sectors Pension Fund Services are currently a narrow market but may soon represent be a tremendous opportunity considering the rise in middle class in India.

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