The pandemic has made us realise how crucial insurance is for preserving our future and ensuring our well-being. However, despite the impact of the pandemic, shifting demographics and a booming economy have led to a surge in the insurance sector.
The insurance sector has been expanding, and this increase may be attributed to higher salaries and more industry knowledge. With an annual growth rate of 32–34%, India ranks fifth among rising insurance markets globally for life insurance.
In today’s article, we will take a closer look at the insurance sector of India, its past, present, and future, along with the top insurance companies in the country.
What is the insurance sector in India?
There are two primary categories of insurance on the market: non-life insurance (general insurance) and life insurance. The Insurance Regulatory and Development Authority of India (IRDAI) is in charge of overseeing both life and non-life insurance.
While non-life insurance companies cover our daily needs, such as house, auto, and bike insurance, as well as travel, life insurance companies provide coverage for an individual’s life.
Additionally, companies that have a direct ownership stake of 51% or more in the central or state government are considered to be public sector insurance companies. Agriculture Insurance Co. of India Ltd., General Insurance Corp. of India, Life Insurance Corp. of India, and National Insurance Co.Ltd. are some of the examples of these companies.
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A brief history of the Indian insurance market
The initial documentation of insurance, in the form of loans for maritime commerce and contracts for carriers, can be found in ancient Indian history. Over time, other countries—particularly England—have significantly impacted India’s insurance industry.
The Oriental Life Insurance Company was founded in Calcutta in 1818, marking the birth of the life insurance industry in India. In India, however, foreign insurance agencies dominated during this period and thrived reasonably well.
In 1957, the Insurance Association of India’s General Insurance Council was established. The government established a committee in 1993 under the leadership of former RBI Governor RN Malhotra to recommend changes to the insurance industry.
To oversee and expand the insurance sector, the Insurance Regulatory and Development Authority (IRDA) was established in 1999 as an independent organisation.
As of March 2022, India has 67 insurers, including 24 life insurers, 26 general insurers, 5 stand-alone health insurance companies, and 12 re-insurers.
Growth and development of the Indian insurance industry
In 2022, the insurance sector noticed an enormous amount of change, including new advancements, revised rules, amendment proposals, and expansion. These changes have allowed the sector to branch out into new areas, and they guarantee that insurers will continue to be relevant in the face of rapid technological change.
The insurance sector is booming for several reasons, including progressive policies, a welcoming regulatory environment, more collaboration, new products, and active distribution channels. The IRDA is also focused on achieving its objective of “Insurance for all by 2047” via ambitious initiatives.
Demand for health and auto insurance was high in the first quarter of FY24, contributing to a 17.9% year-over-year rise in premium revenue for non-life players to ₹64,262.8 crore (US$ 7.72 billion). The non-life insurance market saw a growth of 16.4% in FY23, up from 11.1% the year before, mainly due to an improvement in the health and motor insurance divisions.
According to the most recent statistics from the IRDAI, life insurers received a first-year premium of ₹3.71 lakh crore in FY23, up from ₹3.14 lakh crore in FY22.
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Being the only public sector life insurer in India, Life Insurance Corporation of India maintained its position as the industry leader in FY23, accounting for almost 62.58% of the new business market share.
As of right now, India is home to more than 110 insurtech (technological advances developed to boost the efficiency of the insurance sector) startups. The sector is anticipating a significant boost from these companies, which could lead to more insurance coverage in India.
Plus, with 35% of India’s $3.66 billion in insurtech-focused startup investments, the country ranks as the second-biggest insurance technology market in the Asia-Pacific region, according to S&P Global Market Intelligence.
The future growth of the insurance sector in India
The insurance sector reached a new pinnacle in 2023. With programmes like Bima Trinity, the regulatory body is already leading the industry towards Insurance 2.0, which will make insurance more accessible and inclusive.
Over three to five years, the country’s life insurance sector is projected to see an annual growth rate of 14% to 15%.
Several recent updates show that IRDAI has moved away from a rule-based approach and towards a principle-based one. An example would be the change to EOM (Expenses of Management) that gives the industry participants a lot of flexibility and autonomy.
Programmes including the Pradhan Mantri Fasal Bima Yojana (PMFBY), which offers crop insurance, and the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which offers affordable life insurance to young people, will ensure that this trend continues.
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The top 10 life insurance companies in India
Under the guidelines of the IRDAI, 25 prominent life insurance providers in India have established themselves. These life insurance companies serve both people and organisations by providing all-encompassing insurance policies.
Here is a list of the four leading insurance companies in India based on market cap on BSE (as of January 2, 2024).
| Company | Share price % returns (1Y) as of January 2, 2023 | Net profits (₹ cr.) | Market cap (₹ cr.) |
| Life Insurance Corporation of India | 18.07 | 36,397.39 | 529,845.06 |
| SBI Life Insurance | 15.93 | 1,720.57 | 143,778.09 |
| HDFC Life Insurance | 13.19 | 1,360.13 | 138,782.07 |
| ICICI Prudential Life Insurance | 18.13 | 810.67 | 76,968.83 |
Other companies that are dominating the market, according to Forbes, are Kotak Life Insurance, Aditya Birla SunLife Insurance (ABSLI), Tata AIA Life Insurance, Bajaj Allianz Life Insurance, PNB MetLife India Insurance, and Reliance Nippon Life Insurance Company.
Conclusion
By 2026, the Indian insurance industry is projected to reach a value of US$222 billion. One may argue that 2023 lays the groundwork for the Indian insurance sector to keep flourishing. It may be a turning point in the industry’s development as it embraces digitalisation and simplifies procedures to improve consumer experiences.
