Why India will become the 6th biggest insurance market by 2032

Total insurance premiums is growing by 14% annually.

India will be the sixth biggest market for insurance in the world by 2032, with its total insurance premiums growing by 14% annually in nominal local currency terms over the next decade, a report by Swiss Re said.

India is the 10th biggest insurance market in the world in 2021 worth $130b growing to $420b by 2032.

In 2021, India saw its new business sums assured increase by 17.5% in nominal USD terms from a year before. The growth was boosted by increased risk awareness, the financialisation of savings, and new product launches.

Swiss Re predicts that life insurance premiums will grow by 9% annually (in real terms) by 2032, making India the fifth-largest life market globally. Meanwhile, non-life insurance premiums will continue to grow in 2022 and 2023, but at a slower pace due to the Russia-Ukraine war and high inflation. 

“Health is the largest line of business in the non-life sector, followed by motor and agriculture. Health premiums grew by 22.5% in 2021, mainly due to a pandemic-related push in demand. We estimate motor premiums will grow by 2.9% in real terms in 2022, mainly due to a rebound in economic activity and higher mobility post-pandemic,” Swiss Re said.

The growth of the insurance industry is also being helped by a series of regulatory developments aimed to improve insurance penetration, increase capital inflow, improve valuation, and facilitate the entry of small, specialised and niche players.

“The regulator is pushing for reforms to develop India as a reinsurance hub. The government has raised the limit on foreign direct investment in the insurance sector to 74% from 49%, and the insurance regulator is planning to introduce risk-based capital (RBC) requirements. The regulator has also suggested amendments to the existing regulatory sandbox that could foster further innovation in the sector,” Swiss Re said.