Insurance sector in India is one of the oldest organised businesses. However, despite an early history insurance coverage has remained low though liberalisation and regulation has brought various private entities in the market and has led to introduction of new innovative services across the board.
Insurance sector is largely categorised in three segments of life, general and health insurance, and all these segments are governed under a common independent regulator, the Insurance Regulatory and Development Authority of India (IRDAI). Life insurance is the biggest segment as it accounts for 74.9% of all premiums and remaining 25.1% of total premium is held by combined non-life insurance segment in India. In FY20, life insurance segment recorded total premium of $81.3 Bn and non-life segment recorded premium of $26.7 Bn and this is a testimony of growth in the Indian insurance market.
Life insurance penetration in India is relatively low at just 3.2%, while non-life insurance penetration is at 1%. Despite low penetration levels India still stands as the tenth largest life insurance market in the world and fifteenth largest non-life insurance market in the world. Low penetration and rising presence of global players reflects the growth opportunity. To make Indian market more attractive government has permitted Foreign Direct Investment (FDI) of up to 74% in the sector. Government is also playing dynamic role by providing healthcare insurance coverage to the marginal sections of the society and crop insurance for farmers thereby inducing innovation in the sector. During the recent pandemic regulators and insurance players came aboard to adopt innovative mechanism for delivery of insurance services, which now has fuelled digitization of insurance services.
FICCI, through its National Committee on Insurance, works with several life and non-life insurance players to formulate measures for improving the adoption of insurance solutions, enhancing standardisation and innovation in insurance offerings and encouraging technology adoption as a tool for transformation of this sector. Support from the Government and the Regulator is very evident in market development and innovation and FICCI Insurance Committee provides regular feedback to the authorities on areas such as product design, product distribution, pricing, underwriting, risk management etc.