THE POTENTIAL OF INDIA'S INSURANCE INDUSTRY

In recent years, India's insurance industry has expanded dramatically. India is the world's fifth largest life insurance market and has emerged as one of the most prominent emerging insurance markets. This expansion has been fueled by increasingly favourable government policies, rising incomes, and increased financial awareness among the middle class. In recent years, the industry has seen an increase in competitiveness, as well as a rapid increase in innovation and new product offerings. In addition, there has been a significant increase in insurance-related startups and foreign investment in India. The government raised the FDI limit for India's insurance industry from 49% to 74% in 2021.This was seen as a boon for foreign insurers in India, as it fueled product innovation, resulting in increased insurance penetration. There are currently 24 life insurance companies in India's insurance industry. Twenty-three of these businesses are private. The Life Insurance Corporation of India is a well-known name in the Indian life insurance industry (LIC). LIC has played a significant role in driving insurance penetration in India and broadening the industry's reach.

Size of India's Insurance Industry The insurance industry in India has grown significantly in recent years. New Business premiums in the life insurance industry have risen rapidly. The Indian life insurance industry has more than Rs. 46,449 crores (US$ 5.68 billion) of deployed capital, assets worth Rs. 5,249,271 crores (US$ 641.98 billion), and infrastructure investments worth Rs. 458,614 crores (US$ 56.08 billion). As of March 2022, the industry had provided direct employment to over 3.55 lakh people and had over 24.43 lakh agents. Product innovation has also increased significantly in the industry. In India's life insurance industry, the total number of products increased from 665 in March 2020 to 800 in March 2022. There are currently 847 products in the Life insurance industry.

New business premiums in the Life insurance industry stood at US$ 38.3 billion in FY22, from US$ 26.21 billion in FY19. The life insurance industry's renewable premium also stood at Rs. 377,398 crores (US$ 46.16 billion), out of which Rs. 64,383 crores (US$ 7.87 billion) were linked premiums and Rs. 313,015 crores (US$ 38.27 billion) were unlinked premiums.

The non-life insurance sector in India has also grown significantly. Non-life insurance gross direct premiums increased 9.40% from Rs. 201,739.66 crores (US$ 24.68 billion) in FY21 to Rs. 220,700.23 crores (US$ 26.98 billion) in FY22. The gross direct premium in FY23 (until September 2022) was Rs. 125,195.91 crores (US$ 15.30 billion), a 15.31% increase over the same period the previous year. Health, automobile, fire, and liability insurance dominated India's non-life insurance market. Despite significant growth in India's insurance industry, the country's overall insurance penetration was only 4.20%, with the Life insurance sector accounting for 3.20% and the Non-Life insurance sector accounting for 1%.

Key Factors triggering the growth of insurance markets in India:

• Increased Distribution of Rural Insurance:

  Including the uninsured rural areas and the urban poor in insurance coverage is crucial to enhance insurance penetration in India. Insurance companies provide creative, affordable insurance solutions that correspond to the market. The government of India also introduced Ayushman Bharat to provide insurance for India's 10 crore poor and vulnerable families and provides coverage up to Rs. 5 lakh (US$ 6,117).

• Product innovation, Cost-effective offerings:

  For almost all non-life insurance products and some life insurance products, Insurance Regulatory and Development Authority (IRDAI) has implemented the "use & file" approach. This approach has aided insurance providers to focus on developing innovative, cost-efficient, and simple retail insurance products.

• Technology & Innovation:

  With the help of big data and digital transformation, the insurance market in India is evolving rapidly. Technology is being used efficiently to speed up claim processing and settlement, which reduces turnaround times (TATs) and boosts consumer confidence. Machine learning has the potential to significantly improve the operations and complaint procedures of insurance firms, reduce claim fraud, and automate settlements. Technology integration throughout the insurance sales cycle will revolutionize the market over the coming years and significantly increase insurance penetration.