India’s life insurance sector to grow 15% per year until 2020: Timetric report
India’s life insurance sector is anticipated to grow at a compound annual growth rate of almost 15% from 2015-2020, according to a new industry forecast report published by Timetric.
Life insurance is the largest segment of the insurance industry in India, accounting for 79.2% of gross written premiums.
The strong growth is down to a growing economy and higher disposable incomes for the population and this growth is expected to continue in large part due to the low level of life insurance penetration 2015 which was 2.7% of GDP, compared to 3.7% four years earlier.
FDI liberalisation should help foreign insurers challenge the state owned giant
The Life Insurance Corporation of India (LIC) – the state owned insurer – earned 72.6% of the life gross written premium in 2015. This demonstrates the extent to which the insurance market in the country is still controlled by state managed or owned organisations.
Nevertheless, there have been moves in recent years to liberalise the market. The major reform has been to increase the FDI limit in insurers from 26% to 49%. This increase became effective from March 2015 last year and has enabled foreign insurers to have greater control over their Indian operations.
It is expected to attract more insurers to a fast growing market. Aviva, Sun Life Financial, Axa, Dai-ichi Life and AIA Group are just a few of the insurers that have chosen to increase their stakes in their domestic insurers.
Direct marketing becomes the most popular channel for life insurance
Direct marketing is the dominant distribution channel for the India life sector, accounting for 49.7% of new business premium in 2015. This coincides with a slide in the new business market share of agencies, which fell from 46.6% in 2011 to 35.8% in 2015.
This can be attributed in part to the number of agents falling from 2.36 million in 2011 to 2.08 million in 2015. Interestingly, the agent figures for LIC fell from 1.34 million to 1.08 million over the same period.
Source: Company Press Release