Indian Insurance Industry

New Avenues For Growth 2012

Publication Date	September 2005
Publisher	RNCOS
Product Type	Report
Pages	80
ISBN Number	not applicable
Product Code	RCS00057

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Summary

With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector.

The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.

Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.

The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. Thiss report, "Indian Insurance Industry: New Avenues for Growth 2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.

Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent.

There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market.

Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and tabular format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies.

Report Highlights

Gains of Liberalization in Indian Insurance Sector
Indian Insurance Market Segmentation By Products
Size of the Market and Market Share Of Life Insurers, In INR (crore)
Market Share Of Non-Life Insurers
Forecast of Life Insurance Growth Up to 2012
Forecast of Non-Life Insurance Growth Up to 2012
Market Revenue of Both Public and Private Insurers
Policies and Measures Taken By IRDA To Develop The Insurance Market
Research and Development Activities
Regulation of insurance and reinsurance companies
Major Challenges That Indian Insurance Sector is Facing
Profiles of the Major Players

Report Features

In the globalize market scenario, companies need to understand and challenge the competitive markets they operate in. Thiss "Indian Insurance Industry: New Avenues for Growth 2012" is a complete analysis of the market that will help you in decision making. Chapter 2, 3, and 4 of this report discussed the impact of liberalization of the market and market shares of public and private sector companies and polices implemented by IRDA to develop the insurance market in India. Chapter 5, 6, and 7 deals with market revenue of private and public players, opportunities and forecasts and policies taken by IRDA to develop the insurance market. Major challenges of Indian Insurance Sector along with Profiles of major players are discussed in Chapter 8 and 9.

Content

1. Executive Summary
2. Gains of Globalization and Indian Insurance Sector
3. Appraisal of the Indian Insurance Market - A Global Perspective
4. Indian Insurance Market Segmentation by Products
- 4.1 Life Insurance
  - 4.1.1 Market Share of Public and Private Life Insurers, 2005
  - 4.1.2 New Products in the Market
  - 4.1.3 Commission and Operational Expenses of the Life Insurers, 2005
- 4.2 Non-Life Insurance
  - 4.2.1 Market Share of Public and Private Non-Life Insurers, 2005
  - 4.2.2 Premium Collected by Non-Life Insurers - Segment Wise, 2005
  - 4.2.3 New Polices Issued by Public and Private Sector, 2005
  - 4.2.4 Innovations in Products Introduced
  - 4.2.5 Premium Underwritten Outside India, 2005
  - 4.2.6 Expenses of Non-Life Insurers
  - 4.2.7 Incurred Claims Ratio of Public and Private Sector, 2005
  - 4.2.8 Investments of Public and Private Non-Life Insurers
- 4.3 Other Products
  - 4.3.1 Health Insurance
  - 4.3.2 Crop Insurance
  - 4.3.3 Micro Insurance
    - 4.3.3.1 Supply and Demand Side Developments in Micro Insurance
  - 4.3.4 Credit Insurance
5. Market Revenue of Indian Insurance Companies
- 5.1 Profits of the Life Insurers, 2004
  - 5.1.1 Paid Up Capital of Life Insurers, 2005
  - 5.1.2 Benefits Paid to the Customers, 2004-05
  - 5.1.3 Investment Income
- 5.2 Profits of the Non-Life Insurers
  - 5.2.1 Paid Up Capital of Non-Life Insurers and Re-insurer, 2005
  - 5.2.2 Investment Income
  - 5.2.3 Dividends Paid by Public Sector Insurers, 2005
6. Indian Insurance Industry - Opportunities and Forecasts
- 6.1 Projected Growth of Emerging Global Markets
- 6.2 GOI Proposal to Raise FDI Cap by 49%
- 6.3 Role Of IRDA
- 6.4 Market Penetration Rates in Indian Insurance Sector
  - 6.4.1 International Comparison of Insurance Penetration by Continent/Country
  - 6.4.2 International Comparison of Insurance Density
- 6.5 Opportunities for Private Companies in the Rural Market
- 6.6 Forecast of Life and Non-Life Insurance Growth in India, 2012
7. Policies and Measures taken by IRDA to Develop the Insurance Market
- 7.1 Reforms
- 7.2 Future Direction of Reforms
- 7.3 Issues in Integration
8. Major Challenges Facing India's Insurance Market
- 8.1 Penetration with the Regional Areas
- 8.2 High level of Regulation
- 8.3 Establish a Sizeable Domestic Reinsurance Market
- 8.4 Strife between Intermediaries and Distribution Channels
- 8.5 Deregulation and Consolidation of Financial Services
9. Company Profiles of Major Life Insurers by Market Share
- 9.1 Life Insurance Corporation Of India
- 9.2 ICICI Prudential Life Insurance Company Limited
- 9.3 Birla Sun Life Insurance
- 9.4 Bajaj Allianz Life Insurance
- 9.5 Tata-AIG Life Insurance
- 9.6 AVIVA Life Insurance
- 9.7 ING VYSYA Life Insurance
- 9.8 HDFC-STD Life Insurance
List of Figures:
- Figure 3-1: Global Premium Growth (%), 2004
- Figure 3-2: Number of Registered Insurers in India, 2004-05
- Figure 3-3: Life Insurance Market Growth (%), 2004-05
- Figure 4-1: Number of New Policies Issued by LIC & Private Sector (%), 2003-04 & 2004-05
- Figure 4-2: Operating Expenses of Life Insurers & Private Sector (INR Lakh), 2003-2005
- Figure 4-3: Segment-wise Premium Underwritten by Non-Life Insurers (INR Lakh), 2002-03 to 2004-05
- Figure 4-4: Number of New Policies Issued by Public & Private Sector Non-life Insurers (2003-04 & 2004-05)
- Figure 4-5: India - Ratio of Outside Premium to Total Premium (%), 2002-03 to 2004-05
- Figure 4-6: Non-Life Insurers - Gross Direct Premium from Business Outside India (INR Lakh), 2002-03 to 2004-05
- Figure 4-7: Commission Expenses of Private Sector Non-Life Insurers (INR Lakh), 2002-03 to 2004-05
- Figure 4-8: Commission Expenses of Public Sector Non-Life Insurers (INR Lakh), 2002-03 to 2004-05
- Figure 4-9: Expenses of Insurers (%), 2005
- Figure 4-10: Incurred Claims Ratio of Private Sector Non-Life Insurers (%), 2002-03 to 2004-05
- Figure 4-11: Incurred Claims Ratio of Public Sector Non-Life Insurers (%), 2002-03 to 2004-05
- Figure 4-12: People Covered by the Type of Health Insurance (%), 2005
- Figure 4-13: Farmers Covered by National Agriculture Insurance Scheme (%), 2003-04 & 2004-05
- Figure 5-1: Paid Up Capital of Non-Life Insurers and Re-insurer (INR Crore), 2002-03 to 2004-05
- Figure 5-2: Dividends Paid by Public Sector Insurers (INR Lakh), 2002-03 to 2004-05
- Figure 6-1: Life Insurance Premium Growth in Emerging Markets ($ Billion), 2004 & 2014
- Figure 6-2: Non-Life Insurance Premium Growth in Emerging Markets ($ Billion), 2004 & 2014
- Figure 6-3: Non-Life Insurance Penetration Rates across the World (%), 2000
- Figure 6-4: India - Forecast of Life Insurance Growth (INR Billion), 2012
- Figure 6-5: India - Forecast of Non-Life Insurance Growth (INR Billion), 2012
List of Tables:
- Table 3-1: Developments in the Major Insurance Markets, 2004
- Table 3-2: Key Insurance Market Indicators (Global and Indian), 2003
- Table 4-1: Premium Underwritten by Life Insurers (INR Lakh), 2004 & 2005
- Table 4-2: Commission Expenses of Life Insurers (INR Lakh), 2002-03 to 2004-05
- Table 4-3: India - Gross Direct Premium (INR Lakh), 2004 & 2005
- Table 4-4: Segment-wise Premium Underwritten by Non-Life Insurers (INR Crore), 2003-2004 & 2004-2005
- Table 4-5: India - Segment-wise Gross Direct Premium (INR Crore), 2003-04 & 2004-05
- Table 4-6: India - Health Insurance Coverage (in Million), 2005
- Table 4-7: Growth in Gross Premium of Insurance Companies (%), 2003-04 & 2004-05
- Table 4-8: Proportion of Major Business Segments in Non-Life Insurance Sector (%), 2002-03 to 2004-05
- Table 4-9: Details of Health Business across various Insurers, 2003-04 to 2004-05
- Table 5-1: Paid Up Capital of Life Insurers (INR Crore), 2002-03 to 2004-05
- Table 6-1: Top 10 Emerging Insurance Markets in Life Insurance
- Table 6-2: Top 10 Emerging Insurance Markets in Non-Life Insurance
- Table 6-3: Insurance Companies Share (%), 2004 & 2005
- Table 6-4: Comparison of Insurance Density and Penetration, 2004