CRM - Insurance Sector Analysis

Group 4
Nirmiti Chopdekar

Palak Sharma

Rahul Gondaliya

Miraj Akbari

The history of India’s insurance industry reflects the country’s economy since the pre-
independence era. Insurance companies were nationalized after independence and the industry
was opened-up to private players only after the post-liberalization measures in 1991. Today, the
value of gross premiums collected by life insurance companies is over five trillion Indian rupees
with insurance penetration levels as well as the density showing an upward trend. Even then,
India has a far lower insurance penetration rate compared to the global average, leaving much
room for growth.
The insurance industry of India has 57 insurance companies 24 are in the life insurance business,
while 34 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the
sole public sector company. There are six public sector insurers in the non-life insurance
segment. In addition to these, there is a sole national re-insurer, namely General Insurance
Corporation of India (GIC Re). Other stakeholders in the Indian Insurance market include agents
(individual and corporate), brokers, surveyors and third-party administrators servicing health
insurance claims.

Penetration of life and non-life insurance across India from 2001 to 2019
 Market Size

The government has always pushed for insurance penetration in the economy.
“The insurance industry with combined life and non-life can easily grow at 40-50 per cent in the
next five years if things are settled down and otherwise it should grow at 25-30 per cent,” said
TL Alamelu, member (Non-Life), IRDAI
The share of life insurance in total premium in India is 74.94% and the share of non-life
premium is 25.06% (2019-20)
Life insurers recorded new business premium of INR 2.78 tn ($38 bn) in FY21 growing at 7.49%
over the last year with private life insurers growing at 16.29%. Private Life Insurers account for
33.8% of the industry’s new business premium (FY21) with the rest being accounted for by the
Life Insurance Corporation of India (LIC).
During the last year (FY20), life insurers issued 288.47 lakh new individual policies, out of
which LIC issued 75.9% of policies and the private life insurers issued 24.1% of policies.
Six standalone private sector health insurance companies registered a jump of 66.6% in their
gross premium at Rs 1,406.64 crore (US$ 191.84 million) in May 2021, as against Rs. 844.13
crore (US$ 115.12 million) earlier.
In March 2021, health insurance companies in the non-life insurance sector increased by 41%,
driven by rising demand for health insurance products amid COVID-19 surge.
According to S&P Global Market Intelligence data, India is the second-largest insurance
technology market in Asia-Pacific, accounting for 35% of the US$ 3.66 billion insurtech-focused
venture investments made in the country.
Growth Drivers

Favourable Demographics: Younger working population proportion & rise in nuclear family
structures is driving insurance coverage

Government Programs: Govt. initiatives such as PM-JAY, PMFBY, PMJJBY, PMSBY etc.
are increasing insurance penetration

Motor Industry: Strong outlook for motor vehicles market driven by personal mobility needs to
further drive motor insurance penetration

Growing Household Savings: Increase in formalization of household savings and awareness

towards financial products
 Sector Composition

The industry is divided into two categories- life insurance and non-life insurance, also
known as general insurance. Both these are governed by the Insurance Regulatory and
Development Authority of India (IRDAI) whose main role is to monitor the sector while
safeguarding the rights of consumers. Overall, the country has 68 registered insurers of
which 24 are part of the life insurance sector, 27 are general non-life insurers, and the
remaining make up the standalone health insurers and re-insurance agents. In the life
insurance sector, the Life Insurance Corporation (LIC) is the only public sector company,
while the non-life insurance sector has six public sector insurers. Notably, LIC has been
one of the leading brands in the country in terms of its brand value and was worth over
eight billion U.S. dollars in 2020.
Private insurers have been recording a good growth in the non-life insurance sector. In
fact, since the financial year 2019, private non-life insurers are leading ahead of public
insurers with a 48 percent market share compared to a share of around 39 percent by
public insurers in 2020. Traditionally, the non-life market in the country has been
dominated by the motor vehicle insurance due to mandatory third-party liability.
However, health insurance has emerged as the fastest growing segment in recent years
due to a growing awareness regarding healthcare along with high out-of-pocket
healthcare expenses. Apart from this, crop insurance was also an important segment in
the overall private general insurance product mix, constituting a 22 percent market share
in fiscal year 2019.
Indian Life Insurance Industry had written over 5.7 trillion Indian rupees worth of
life insurance premiums in financial year 2020. This was over twelve percent growth
in premiums from the previous financial year. The linear rise in premium was
recorded over the years from financial year 2002 except for the slight fall in financial
year 2012 in the country.

Value of investments in non-life insurance in India from financial year 2017 to 2020, by
sector

As on March 31, 2020, India’s non-life insurance industry registered investments worth
over 3.6 trillion Indian rupees. Out of this, over 1.95 trillion rupees were invested by the public
sector, whereas 1.68 trillion rupees were invested by the private sector.
 Government Initiatives

The Indian government has made several steps to help the insurance industry grow. Several
flagship schemes have been launched by the government to boost the insurance sector. 

1. Pradhan Mantri Jan Suraksha Bima Yojana: This scheme focuses on providing affordable
insurance to people below the poverty line, in rural areas.

2. Pradhan Mantri Jeevan Jyoti Bima Yojana: This initiative provides life insurance for
people employed in the unorganised sector.

3. Atal Pension Yojana: This guarantees pension Coverage to all citizens in the unorganised
sector who join the National Pension System (NPS).

4. Ayushman Bharat Yojana: Each beneficiary family will receive medical insurance cover of
INR 5 lakh, which they can use to get treatment at public or private hospitals .
 Key Trends

Share of public and private sector in Life Insurance in India (%)

Insurance Penetration rate indicates the level of development of insurance sector in a country.
Penetration rate is measured as the ratio of premium underwritten in a particular year to the
GDP.

Overall Insurance Penetration includes:

Life insurance penetration considers premiums from life insurance policies only as a percentage

of GDP and

Non-life insurance penetration considers premium from other than life insurance policies like
auto insurance, health insurance, etc. as a percentage of GDP

According to IRDAI’s annual report, India’s overall Insurance Penetration for FY2017-18 was at
3.69% of Premium as a % of GDP.

In FY20, share of private sector in life insurance in India increased to 33.78% from 33.58% in
FY19.
In FY20, share of private sector in general and health insurance in India increased to 48.03%
from 47.97% in FY19
Share of public and private sector in General and Health Insurance in India (%)
Growing Share of Private Sector in Non-Life Insurance Segment:

1. We can see how aggressively the private sector is growing in Non-Life Insurance
Segment.
2. Non-life insurance products can be broadly categorized into the following product
verticals : Motor insurance, Health insurance, Crop insurance, Fire insurance, Marine
insurance and other insurance products.

1. Individual market share in terms of Gross Direct Premium Collected is shown above.
2. In Non-Life Insurance segment, New India Assurance is the largest general insurance
company in India in terms of net worth, domestic gross direct premium, profit after tax
and number of branches.
 Advantage India

The benefits of a non-life insurance policy are:

1. In case of health insurance, financial help is provided at the time of a medical emergency.

2. It is mandatory by law to buy a third-party motor insurance policy. It can take care of the
compensation to be paid to the third party in case of damage to property or life.

3. Home insurance covers the residential property of the policyholder against many
unforeseen incidents, like fire, burglary, natural calamities, riots, etc. 

4. Travel insurance plans offer insurance coverage to senior citizens and children as well.
These help with issues like loss of baggage, accidents, loss of documents, etc. in a foreign
land.

5. Commercial insurance benefits the businesses with policies like employee benefits
insurance, shopkeepers’ insurance, property and marine insurance, etc.

The benefits of a non-life insurance policy are:

 Death Benefits: Life insurance enables individuals to protect themselves and their
families, in case of any unfortunate happening in the life of the insurer.

 Investment Components: Certain whole life insurance policies offer two-pronged

benefits of both insurance and investment. While one half of your premium is paid
toward insurance, the other half is invested in equity, debt, or combinations of both.

 Maturity Benefits: Life insurance policies can also double as a savings instrument by
offering maturity benefits. If the insured survives the policy term and no claims have
been made, the total premiums paid are returned at the time of maturity of the policy.

 Tax Benefits: Under the umbrella of Section 80C of the Income Tax Act (ITA),
individuals can reduce their tax liabilities by investing in specific instruments. 
 Coverage Against Liabilities: Taking a life insurance policy ensures that your family
has the financial means to steadily meet your loan and mortgage repayments, even in
your absence.
 Riders: You can opt for riders to enhance your life insurance coverage. Several riders,
ranging from Critical Illness to Accidental Total Permanent Disability are available and
help protect you and your loved ones against instances wherein your life cover may not
come into play.