After clearance of Insurance Amendment Bill, India’s insurance sector is expected to grow even faster than the country’s overall economic growth, opening up new business avenues across the industry. With a large number of insurance providers already operating in the country, the Indian insurance industry has shown early signs of entering a consolidation phase, and an improved distribution infrastructure, the adoption of new channels and differentiated product offerings will continue to change the competitive landscape significantly.

India’s low life insurance penetration rate and the rising awareness of the need for insurance will be key growth factors in the Indian insurance industry. Favourable and new foreign investment policies along with increased capital-raising options will also create an environment for collaborations and joint ventures. India’s reinsurance market is also expected to continue growing, driven mainly by growth in non-life and accident and health insurance.

Overview – The Indian Insurance industry

Indian Insurance industry comprises of 52 insurance companies. Amongst these 24 are in life insurance business and 28 are non-life insurers

Out of 28 non-life insurance companies, five private sector insurers are registered to underwrite policies exclusively in health, personal accident and travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more specialized insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance.

Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India. Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third party administrators servicing health insurance claims.

Market Size

India’s life insurance sector is the biggest in the world with about 36 crore policies which are expected to increase at a compound annual growth rate (CAGR) of 12-15 per cent over the next five years. The insurance industry plans to hike penetration levels to five per cent by 2020, and could top the US$ 1 trillion mark in the next seven years.

The total market size of India’s insurance sector is projected to touch US$ 350-400 billion by 2020 from US$ 66.4 billion in FY13.

The general insurance business in India is currently at Rs 77,000 crore (US$ 12.41 billion) premium per annum industry and is growing at a healthy rate of 17 per cent.

The Rs 12,606 crore (US$ 2.03 billion) domestic health insurance business accounts for about a quarter of the total non-life insurance business in the country.

Investment corpus in India’s pension sector is anticipated to cross US$ 1 trillion by 2025, following the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013, according to a joint report by CII-EY on Pensions Business in India.

Expected Rise

Indian insurance companies are expected to spend Rs 117 billion (US$ 1.88 billion) on IT products and services in 2014, an increase of five per cent from 2013, as per Gartner Inc. Also, insurance companies in the country could spend Rs 4.1 billion (US$ 66.11 million) on mobile devices in 2014, a rise of 35 per cent from 2013.


Insurance sector of India needs capital infusion of Rs 50,000 crore (US$ 8.06 billion) to expand, maintain a healthy capital base and improve solvency standards, according to Insurance Regulatory Development Authority (IRDA).

Government Initiatives

The Government of India has taken a number of initiatives to boost the insurance industry. Some of them are as follows:

The Reserve Bank of India (RBI) has allowed banks to become insurance brokers, permitting them to sell policies of different insurance firms subject to certain conditions.

Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance.

Exchange Rate Used: INR 1 = US$ 0.016 as on February 25, 2015