The Indian insurance market is expected to be worth almost US$222 billion by 2026, with rapidly rising insurance penetration driven by the growing middle class and increasing digital access, according to a report by consultancy firm Redseer.
The report said the life insurance segment forms the largest part of the market as of 2022, with a total addressable market (TAM) of $66.5 billion, or close to three-fourths of the entire Indian market. This is followed by motor insurance, which has a TAM of $10 billion, and retail health insurance, with TAM of $4.7 billion.
The motor insurance segment will benefit from more stringent vehicle regulations and the digitalisation of the Indian economy, the report said. The rising cost of healthcare, the COVID-19 pandemic, and campaigns to raise awareness of insurance policies have contributed to increased demand for retail health insurance.
With digital insurance penetration in India standing at 2%, the report said there is significant room for growth in the market. For comparison, digital insurance penetration in the US and China is at 14% and 6%, respectively.
The report identified sizeable growth opportunities in the business-to-consumer (B2C) distribution model. Due to direct customer interaction, B2C claims risk is lower than in other models, while better customer awareness drives a higher persistence rate. The customer experience is also enhanced by end-to-end digital applications.
“The experiences that these new age insurtech models offer for customers are not merely digital, they’re delightful,” said Mrigank Gutgutia, partner at Redseer. “Additionally, these new and rising models are not just making insurance great for customers, they are also empowering agents with the power of technology – no more chasing customers with messy paperwork. Instead, they can handhold customers through the entire insurance experience from anywhere, digitally.”
