General Insurance in

India
 Table of Contents
❖ Growth & Potential of ❖ Future potential of ❖ Growth & potential of
general insurance in general insurance insurance in India
India

❖ Growing importance
❖ Contemporary issues
❖ Life insurance of insurance
in Insurance sector in
potential
India

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GROWTH AND POTENTIAL OF GENERAL
INSURANCE INDIA
The Indian insurance industry has
undergone transformational changes
since 2000 when the industry was
liberalised. With a one-player market to
24 in 13 years, the industry has
witnessed phases of rapid growth along
with extent of growth moderation and
intensifying competition.

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 There have also been a number of product and operational innovations necessitated by consumer need and
increased competition among the players. Changes in the regulatory environment also had a path-breaking
impact on the development of the industry. While the insurance industry still struggles to move out of the
shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of
the industry augur well for a roadmap to be drawn for sustainable long-term growth.

There was exponential growth in the first decade of insurance industry liberalization. Backed by innovative
products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this
frenzied growth also brought in its wake issues related to product design, market conduct, complaints of
management and the necessity to make course correction for the long term health of the industry.

Regulatory changes were introduced during the past two years and life insurance companies adopted many new
customer-centric practices in this period. Product-related changes, first in ULIPs (Unit Linked Insurance Plans)
in September 2011 and now in traditional products, will have the biggest impact on the industry.

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 FUTURE POTENTIAL OF GENERAL INSURANCE

India continues to be a country of savers though we have witnessed a decline in the household
savings rate in the past couple of years. In India, the problem lies in household savings lying
idle or getting invested in saving instruments that do not help them achieve their life stage goals.
There is a worrying trend of larger portion of household savings getting into non-productive
physical assets such as real estate and gold.

But even then, the future looks interesting for the life insurance industry with several changes in
regulatory framework which will lead to further change in the way the industry conducts its
business and engages with its customers. World over it has been observed that the life
insurance industry does behave in
a counter cyclical manner in many
cases, e.g., in a situation where
Quotations are commonly
the economic growth is slowing
down, due to other factors suchprinted
as as a means of
high current account and inspiration
fiscal and to invoke
philosophical thoughts from the
deficits, currency depreciation,
high interest rates, savings rate reader.
will continue to be high, leading
to higher demand for life
insurance.

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Life insurance is a big savings vehicle along with banking in such uncertain economic environment and
so we expect the industry to fare reasonably well. Demographic factors such as growing middle class,
young insurable population and growing awareness of the need for protection and retirement planning
will also support the growth of Indian life insurance.

For life insurance, it is time to re-commit itself to customer-centric behaviour, product solutions based
on consumer needs, ethical market conduct, transparency and governance. The growth will be the
natural outcome for now and years to come.

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 GROWTH AND POTENTIAL OF LIFE INSURANCE IN INDIA

Introduction
The insurance industry of India has 57 insurance companies - 24 are in the life
insurance business, while 33 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.

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Market Size

Government's policy of insuring the uninsured has gradually pushed insurance penetration in the
country and proliferation of insurance schemes.

Gross premium collected by life insurance companies in India increased from Rs 2.56 trillion (US$
39.7 billion) in FY12 to Rs 7.31 trillion (US$ 94.7 billion) in FY20. During FY12– FY20, premium
from new business of life insurance companies in India increased at a CAGR of 15 per cent to reach Rs
2.13 trillion (US$ 37 billion) in FY20.

Overall insurance penetration (premiums as per cent of GDP) in India reached 3.69 per cent in 2017
from 2.71 per cent in 2001.

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 Investments and Recent Developments

The following are some of the major

investments and developments in the Indian
insurance sector.

Enrolments under the Pradhan Mantri

Suraksha BimaYojana (PMSBY) reached
154.7 million till December 2019 since its
launch.

Over 53.8 million famers were benefitted by

the Pradhan Mantri Fasal BimaYojana
(PMFBY) in FY20.

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In April 2020, Axis Bank acquired an additional 29 per cent stake in Max Life Insurance.

In November 2019, Airtel partnered with Bharti AXA Life to launch prepaid bundle with insurance
cover.

In September 2019, Competition Commission of India (CCI) approved acquisition of shares in SBI
General Insurance by Napean Opportunities LLP and Honey Wheat.

Government Initiatives

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

As per Union Budget 2019-20, 100 per cent foreign direct investment (FDI) was permitted for insurance
intermediaries.

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In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide

Future outlook and Growth drivers:

The insurance industry in India is expected to register healthy, consistent growth based on the following
drivers:
1. Low insurance penetration in India: 3.69% (2017), compared to 6.3% globally (2016) 2.
Government programs to increase insurance cover: Pradhan Mantri Suraksha Bima Yojana, Pradhan
Mantri Jeevan Jyoti Bima Yojana, Ayushman Bharat etc 3. Strong growth in the automotive industry
is expected to boost motor insurance 4. Increasing interest in buying insurance; rising internet usage
has contributed to this increasing interest

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5. Innovative products like Unit Linked Insurance Plans (ULIPs) have contributed to the growth of
insurance cover.
6. New distribution channels such as bancassurance, online distribution and NBFCs are contributing
to the growth in insurance cover

Government initiatives / policies

1. Foreign Direct Investment (FDI) limit for the insurance sector increased from 26% to 49%.
2. Life insurance companies operational for 10+ years are now allowed to go public by IRDA
3. Government plans to divest a significant stake in PSU general insurance companies in order to
execute the steep disinvestment target
4. Several flagship schemes have been launched by the government to boost the insurance sector.

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14
 LIFE INSURANCE POTENTIAL
Growth of Life Insurance Business in India:

In life insurance business, India ranked 9th among the 156 countries, for which data are published by Swiss Re.
During 2011-12, the estimated life insurance premium inIndia grew by 4.2 per cent (inflation adjusted). However,
during the same period, the global life insurance premium expanded by 3.2 per cent. The share of Indian life
insurance sector in global market was 2.69 percent during 2012, as against 2.45 percent in 2011.

Importance of Agent’s Training:

The future success of the life insurance profession depends, above all, upon the knowledge and integrity of the
people who advise customers – and are their first and most important point of contact. At the IRDA, the
regulator’s goal is to see that life insurers are increasingly able to attract, motivate and retain outstanding people,
committed to adopting a ‘needs-based’ approach to financial advice.

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Agent’s Qualification:

Keeping the present market needs, the IRDA conducted a thorough review of the existing life
insurance agent licensing qualification. It was decided to utilize the expertise of Chartered Insurance
Institute (CII), London in enhancing the existing syllabus of IC-33 “Pre-recruitment qualification for
life insurance agents” of the Insurance Institute of India(III). All the key stakeholders worked together
to realize this goal.

The IC-33 syllabus has been revised. The training in the revised syllabus has commenced from 1 st
October, 2011. The new course book and the revised qualification that agents will now use is a vital
part of the Authority’s strategy. IRDA has developed a syllabus that is challenging in its scope and
depth. It does not simply encourage agents to memorise facts and figures; but also tests their
understanding of learning, and ability to apply it in a wide range of practical real-life situations.

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Need Analysis

This is another initiative identified by IRDA as a step in curbing wrong advice and mis selling. The idea is to
require insurers to have Prospect Product Matrix that will match a product with the requirement, based on the
Needs Analysis carried out. The feedback of the stakeholders on the initiative has been received and draft
guidelines are under preparation. Guidelines relating to distance marketing have been issued by IRDA which
address challenges relating to mis-selling using distance marketing mode, a fallout of the advancement in
technology. While the benefits of having new and faster channels need to be reaped, the loopholes created by them
need plugging and this is precisely what the guidelines are aimed at.

Persistency of Life Insurance policies

IRDA has issued guidelines to agents for persistency of life insurance policies to ensure that servicing of policies
by agents is sustained and is with a long term of objective of servicing the policy holder and not driven by an
objective of just pushing sales.

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 Contemporary issues in insurance sector in India

People depend on insurance for a

multitude of reasons, but it all boils down to
one basic Principle: minimizing personal
risk on a day-to-day basis. Clients pay a fee,
and in exchange, insurers promise to cover
any costs associated with future calamities
(which may or may not actually occur).

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Paying for peace of mind: it’s a relatively simple concept. But today, determining what
constitutes risk is anything but easy. As new technologies emerge and consumer trends and
preferences change, pricing policies and marketing them effectively is an ongoing and
constantly evolving challenge.
Growing importance of IT

All insurance companies now use information technology (IT) to benefit their business
and to improve convenience for their customers. Today, customers can pay their
premiums and check the status and other details of their policy using the company’s
website. Updates relating to the receipt of premiums or changes to their policy are sent to
the customer through mobile SMS.

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Cyber Insurance

As our we spend more and more of our time on the internet, risk is shifting accordingly.
Personal internet security policies and enterprise-level cyber risk management are both
major areas for potential growth.
Importantly, insurers also must focus their attention inwards and sure up their own cyber
security — today, only about 33% of insurance holders are confident in their provider’s
ability to withstand a major cyber attack. Going forward, the ability to protect client data
will become a key selling point for insurers across every vertical.

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 Growing importance of insurance
There is increased price and value transparency. A fast-growing collection of price and feature-
comparison websites empowers consumers to compare and contrast hundreds of insurance products by
price, value, and benefits. These sites are also educating consumers on how to more effectively match
a product choice with their unique needs and willingness to pay, as are insurance brokers.
Consumers are more informed and sophisticated. As prices have become more transparent, consumers
are increasingly open to new propositions based on different variables—such as security, mobility, and
different types of coverage—and these propositions require new, dynamic pricing structures.

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Regulations are putting pressure on profitability. New regulations, including Solvency II,
require insurers to maintain higher capital levels without decreasing overall returns, and to
do that, insurers must either reduce costs or increase pricing.
New entrants are bringing focused, superior propositions.
The insurance industry is diversifying,
with e-commerce,
automotive OEMs, retailers,
and other nontraditional players
offering new, innovative business models
and products.
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 THANK YOU!

PRESENTED BY:
AKANKSHA SENGUPTA
HARSH SHARMA
JALJAKSHI SINGH

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