India’s general insurance market to cross US$40bn by 2022, says GlobalData

Growing middle class, increasing awareness of the need for protection and favorable regulatory landscape are expected to drive the general insurance market in India from INR1.6 trillion in 2017 (US$24.1bn) to INR2.9 trillion (US$40.1bn) in 2022, according to GlobalData, a leading data and analytics company.

GlobalData’s report, ‘Strategic Market Intelligence: General Insurance in India – Key Trends and Opportunities to 2022 reveals that the 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 together accounted for almost 80% share in 2017.

Siddharth Agarwal, Practice Head of Financial Services at GlobalData, comments: “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.” 

Despite the high growth, general insurance penetration (measured as a % of GDP) is very low in India and stands at less than 1%, much lower compared to developed markets such as the US, which had penetration of 7.8% in 2017. Even emerging markets like China and Brazil have higher penetration of 1.8% and 3.3%, respectively.

Motor insurance was the largest category, accounting for 38.8% share of general insurance market with gross premium of INR607.2bn (US$9.3bn) in 2017. Rise in automobile sales and the 2018 regulation mandating sale of three and five year third-party insurance policies on new cars and two-wheelers, respectively helped drive motor insurance growth.

The new Motor Vehicles (Amendment) Bill 2019, which stipulates a penalty of INR2,000 (US$27.8) for driving without insurance policy, is expected to further drive motor insurance growth.

Personal accident and health insurance was the second largest category with 27.1% share in 2017. Property insurance was the third largest category with 15.3% share, followed by marine, aviation and transit insurance with 2.3%, liability Insurance with 1.3% and financial lines with 0.8% share.

One of the key trends, which can be witnessed, is the gradual deployment of technology across the industry value chain. For instance, HDFC Ergo tied-up with IBM for deploying artificial intelligence (AI)-based solutions in its customer relations as well as product development processes.

Similarly, ICICI Lombard is deploying AI-based models in motor and health insurance for claims processing and fraud detection. The same insurer also deployed drones for crop insurance assessment in the Indian state of Gujarat.

Agarwal concludes: “Increasing consumer awareness, the launch of innovative products and the emergence of online distribution channels such as aggregators (Policybazaar.com) will widen the reach of insurance products and help increase penetration in India.”

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