The value of India’s general insurance market is tipped to grow from INR1.6 trillion in 2017 (US$24.1bn) to INR2.9 trillion (US$40.1bn) in 2022, according to a study by data and analytics company GlobalData.
The study, ‘Strategic Market Intelligence: General Insurance in India - Key Trends and Opportunities to 2022’ showed that gross written premium in India’s general insurance market registered a compound annual growth rate (CAGR) of 17.2% between 2013 and 2017. Motor, personal accident & health, and property insurance accounted for almost 80% share in 2017.
A growing middle-class, increasing awareness of the need for protection, and a favourable regulatory landscape were credited for the strong growth of the general insurance market.
“The growth will be mainly driven by private insurers who are looking to capitalize on the opportunities arising as a result of high economic growth and low levels of insurance penetration,” said Siddharth Agarwal, practice head of financial services at GlobalData.
Despite impressive growth over the past few years, general insurance penetration in India has remained low – at less than 1% in 2017. This is lower than other emerging markets such as China and Brazil, which had 1.8% and 3.3%, respectively.
Motor insurance had the largest (38.8%) share of general insurance market, with gross premiums of INR607.2 billion (US$9.3 billion) in 2017. An increase in automobile sales and a 2018 regulation mandating sale of three and five year third-party insurance policies on new vehicles, both contributed to growth. A recently passed law that penalises driving without an insurance policy is also expected to contribute.
One key trend the study highlighted is the gradual deployment of technology across the industry value chain. It mentioned HDFC Ergo’s partnership with IBM to deploy AI-based solutions in its customer relations as well as product development processes. Another insurer, ICICI Lombard, is using AI-based models in motor and health insurance for claims processing and fraud detection.
“Increasing consumer awareness, the launch of innovative products, and the emergence of online distribution channels such as Policybazaar.com and other aggregators will widen the reach of insurance products and help increase penetration in India,” Agarwal said.
