The life insurance industry in India, in terms of gross written premiums, is set to grow at a compound annual growth rate (CAGR) of 10.3% from ₹7 lakh crore ($92.3 billion) in 2021 to ₹11.4 lakh crore ($150.6 billion) in 2026, says a report. As digital distribution channels and product innovation improve, the life insurance industry in India is projected to grow by 10.2% in the year 2022 alone, says London-based data analytics and consulting company GlobalData Plc.
The report finds the projection of double-digit growth for the life insurance industry in India is twice the global average of 5.5%, thanks to increased penetration, positive regulatory developments, and growing awareness.
Anjuli Shrivastava, the insurance analyst at GlobalData, says India’s life insurance industry is seeing major post-pandemic growth, primarily due to growing awareness, increasing demand for group policies, and a favourable regulatory environment. “Furthermore, the life insurance industry is set to grow by 10.2% in 2022, driven by the development of digital distribution channels and product innovation,” she adds.
The data from the past few years shows that Indian life insurers have witnessed strong growth in the sales of group life insurance policies. The Life Insurance Corporation of India (LIC), the largest life insurer in the country, with a 63.2% market share, recorded a 12.7% growth in group life premiums in FY2021 while individual life premiums declined by 2.8%.
Shrivastava says private insurers are increasingly offering “group life policies” as an employee benefit. Such policies, where the risk pool is diverse, leading to lower premiums, are cost-effective employee retention measures, says Shrivastava.
The report highlights the government’s push to increase life insurance penetration has also helped the industry. The Centre’s policy of selling life products to low-income customers through Pradhan Mantri Jeevan Jyoti Bima Yojana has also supported the growth of life insurance in India, it adds.
On the regulatory front, relaxations have helped the companies in product innovation, says the report. “Positive regulatory developments have supported product innovation in the life insurance industry. For example, IRDAI relaxed product approval with the expansion of the ‘Use and File’ process to include life products. Earlier, under the ‘File and Use’ policy, life products required regulatory approval before their launch,” it adds.
As per IRDAI, the idea behind the move is to encourage the insurance industry to respond faster to the emerging market needs, in terms of designing and pricing insurance products. This will also provide more choices to the policyholders, increasing the insurance penetration in India, says the insurance regulator.
As the overall environment becomes competitive, companies are investing in strengthening digital distribution channels. “The COVID-19 pandemic has compelled insurers to develop and increase the digital distribution of their products and gain direct control of customer relationships,” says the report.
Private players were allowed to enter the insurance market 20 years ago, which has changed the game completely. Competition has allowed companies to build multi-channel distribution architecture, make alliances and devise strategies to drive penetration. This was the reason that in March 2022, LIC, which has a huge network of agents across the length and breadth of the country, had announced plans to increase its focus on digital channels after losing market share to private insurers.
