Insurance, a field that may sound confusing or even intimidating to many. The field of insurance is vast and holds a lot of potentials to expand. Currently, a survey suggests that only 50 crores people in India are insured and out of those 50 crores the highest number of people were insured under government-sponsored health insurance schemes, while individual insurance plans had the lowest number of people.
The insurance industry of India has 57 insurance companies – 24 are in the life insurance business, while 33 are non-life insurers.
The statistics show that the insurance sector has scope for growth and the advantages for the insurance companies to focus their attention to India are as follows:
- Robust Demand – Innovative products, use of the internet and technology, an increased number of distribution channels will help the reach of the products.
- Underexplored market – Overall insurance penetration (premiums as % of GDP) in India was 2.9 per cent in 2019, providing a huge underserved market.
- Authority and freehand – Insurance Bill gives Insurance Regulatory and Development Authority (IRDAI) full flexibility to frame regulations for the sector.
- Tax incentives -Insurance companies get attractive tax incentives and 100% Foreign Direct Investment (FDI) permitted for insurance intermediaries.
- Global Corporations – Companies like Airtel and Axis Bank are showing increasing interest in the untapped potential of the insurance sector.
Government Initiatives
The Government of India has taken several initiatives to boost the insurance industry. Some of them are as follows:
- As per Union Budget 2019-20, 100 per cent foreign direct investment (FDI) was permitted for insurance intermediaries.
- In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families. The scheme is expected to increase the penetration of health insurance in India from 34 per cent to 50 per cent.
- The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering (IPO) guidelines for insurance companies in India, which are to looking to divest equity through the IPO route.
- IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital, to expand the pool of eligible investors for the banks.
Road Ahead
The future looks promising for the life insurance industry with several changes in the regulatory framework which will lead to further changes in the way the industry conducts its business and engages with its customers. Understand the intricacies of the insurance sector with MITSDE’s Post Graduate Diploma in Insurance and Risk Management to be a part of the coming glorious years of the insurance sector.