The general insurance industry in India is forecast to grow by 11.4% in 2023 in terms of gross written premiums (GWP), supported by strong economic growth, favorable regulatory developments, and rapid digitalization in the industry, according to GlobalData, a leading data, and analytics company.

According to GlobalData, India’s general insurance industry will grow at a compound annual growth rate (CAGR) of 9.0% from INR3.0 trillion ($38.1 billion) in 2023 to INR4.2 trillion ($49.2 billion) in 2027, in terms of GWP. It is estimated to have grown by 15.6% in 2022.

In 2022, India’s real gross domestic product (GDP) grew at an estimated 7.0% as manufacturing and investment activities gained traction, and industrial output and exports increased. According to the Reserve Bank of India (RBI) forecast, the real GDP is expected to grow at 6.5% in FY2023-24.

Prasanth Katam, Insurance Analyst at GlobalData, comments: “The consistent economic growth will support sectors such as automobiles, construction, real estate, and export and import activities, which will drive the growth of the underpenetrated general insurance market in the country. India’s general insurance penetration stood at 0.95% in 2022, significantly lower when compared to advanced economies in the APAC region like Australia (3.6%), New Zealand (2.1%), and Japan (1.8%).”

Aimed at increasing penetration, the Insurance Regulatory and Development Authority of India (IRDAI) implemented multiple regulatory reforms in 2022-23 to improve the ease of doing business, facilitate product innovation, simplify insurance products, reduce premium rates, and strengthen distribution channels.

Katam continues: “The Indian general insurance industry is expected to see a rise in insurance penetration in 2023 and beyond with the introduction of IRDAI’s online insurance marketplace ‘Bima Sugam’. The new direct-to-customer (D2C) platform, scheduled to be launched later this year, will be a one-stop shop for policy sales, renewals, and claims settlements.”

Furthermore, effective April 1, 2023, the IRDAI directed insurers to reduce agent and broker commissions if a policy is purchased directly from the insurer. With the launch of the new D2C platform, customers will be able to buy policies at a lower premium, which will support demand and growth in the industry.

Katam adds: “In 2022, the IRDAI also introduced the ‘Use-and-File’ procedure for general insurers, permitting the launch of new products in the market without obtaining prior regulatory approval. The new measure allows general insurers to introduce new and innovative products without any administrative delays.”

The growth in the industry will also be supported by IRDAI’s vision of ‘Insurance for All’ by 2047, announced in November 2022. Under this initiative, the regulator proposed several reforms, including reducing the compliance burden on insurance companies, facilitating the entry of new specialized insurers, designing new cost-effective products, and strengthening distribution channels. These reforms will significantly increase insurance penetration in India.

Katam concludes: “2022 proved to be a transformative year for the general insurance sector, with a slew of regulatory reforms to increase insurance penetration in the country. The introduction of the game-changing web-based platform Bima Sugam  and Vision 2047 will support growth in the Indian general insurance industry over the next five years.”