India Insurance Report Q2 2008

As was the case in 1Q08, the main focus of this report is BMI's proprietary Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI's Country Risk Rating (CRR). The IBER makes it easier for the business environment for the insurance sector in a particular country to be compared with the business environment for any other industry in that country that is surveyed by BMI. The IBER also allows an objective and meaningful comparison of the business environment for the insurance sector in one country with the business environment for insurance in another country.

Over the coming months, we will substantially change the format of the BMI insurance reports. In essence, we will focus to a much greater extent on the companies that are active in the non-life and life segments.

India's IBER is 52.3. Relative to other countries in Asia, it is at present a relatively unattractive insurance market for foreign insurers.

The long term potential is enormous and obvious to all observers. On the other hand the current rating is negatively impacted by:

• The extremely low GDP per capita (according to World Bank estimates, 80% of India's 1.1 billion people live on less than US$2 a day)
• The glacial pace of change to the suffocating regulatory framework
• The dominance of state-owned insurers in both the life and non-life sectors The life insurance market remains completely dominated by the state-owned Life Insurance Corporation of India (LIC) that holds around 90% of the local market. In the non-life sector seven of the top ten insurers are state-owned, including each of the four largest.

Over the forecast period, we anticipate that non-life premiums will grow by 13% annually in local currency terms and by 16% in US dollar terms. Life premiums are expected to increase by 2% annually in local currency terms and by 5% in US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$831bn to US$1,404bn and an expected increase in non-life penetration from 0.81% of GDP to 1.00%. The driver of growth in the life segment is the envisaged small rise in life density from US$29.70 per capita in 2007 to US$35.00 per capita in 2012. India's population over the same period is expected to increase from 1,124mn to 1,203mn.

Eventually, India will be a large and important market. In the meantime though, a degree of cautious optimism is appropriate.

• The Sector At A Glance
• Key Insights On The Insurance Sector Of India
• SWOT Analysis
• India Industry SWOT
• Future Development Of BMI's Insurance Reports
• Latest News
• Projections And Forec10
• Projections And Drivers Of Growth
• Country Update
• Macroeconomic Outlook
• Political Outlook
• Insurance Business Environment Rating
• Regional Context
• Analysis Of Competitive Conditions
• India - Non-Life Segment
• India - Life Segment
• Methodology
• Basis Of Projections
• Insurance Business Environment Rating
• List of Tables
  • Table: Overview Of India's Insurance Sector
  • Table: Premiums - Historical Data And Forecasts
  • Table: Growth Drivers
  • Table: India - Macroeconomic Activity
  • Table: India - Insurance Business Environment Indicators
  • Table: Asia Pacific Insurance Business Environment Rankings
  • Table: Non-Life Premiums In A Regional Context, 2007
  • Table: Life Premiums In A Regional Context, 2007
  • Table: Comparison Of Major Lines As % Non-Life Premiums, 2006
  • Table: Presence Of Cross-Border Insurers, Non-Life
  • Table: Presence Of Cross-Border Insurers, Life
  • Table: Insurance Business Environment Indicators And Rationale
  • Table: Weighting Of Indicators