India poised to be 6th largest insurance market in the world by 2032

It is currently 10th amongst the top 20 markets in the world.

India’s insurance market is the second largest amongst all emerging markets in the world.

At its current pace, it is well on its way to being the sixth largest by 2032 according to a report by Swiss Re.

Currently at 10th amongst 20 countries, India has an estimated global market share of 1.9% premium volumes. Swiss re predicts that premiums will grow by an average of 9% per annum in real terms over the next decade, stronger than the 7.5% annual average of 2015 to 2021.

READ MORE: More Taiwan insurers set to inject capital after losses

“At this rate, India will be the 6th largest insurance market in the world by 2032, ahead of Germany, Canada, Italy and South Korea. Our projection is based on expectations of strong economic growth, rising levels of disposable income, India’s young population, increased risk awareness and also digital penetration, and regulatory developments,” Swiss Re said.

India’s insurance regulatory body has made some innovative moves, especially in the general insurance sector, to make insurance more affordable for consumers. In a latest development, the Insurance Regulatory and Development Authority of India has permitted general insurers to introduce tech-enabled concepts for motor own damage covers as part of its first step towards facilitating technology-enabled insurance solutions that will make insurance cheaper.

It also mulls a concept where it will allow retail and corporate customers to take out loans to pay for insurance.

Swiss Re reported that at 1%, non-life insurance penetration in India last year was significantly below the global average of 3.9%. Growth in the non-life sector will be driven by demand for health covers, with people more aware of health security post COVID-19, and also strong support from a government-sponsored mass health programme. Compulsory motor third-party insurance will also grow rapidly as India’s middle class continues to expand and buy more cars.

READ MORE: Indian human rights group seeks mandatory insurance for truck drivers

Meanwhile, life insurance penetration was 3.2% in 2021, almost twice more than the emerging market and slightly above the global average. However, most life insurance products sold in India are savings-linked, with just a small protection component. This means households remain exposed to a large financing gap in the event of premature death of a main breadwinner. The mortality protection gap in India stood at $17t in 2019, (or 83% of total protection needed), one of the largest in the world

Swiss Re also predicts that with the government increasing foreign direct investment (FDI) in domestic insurers from 49% to 74% will allow foreign insurers to strengthen their foothold in the country. There is even expectations that the Indian government will allow FDIs to increase to 100%.

Swiss Re also said that after the initial public offering of India’s largest life insurer, Life Insurance Corporation of India, mergers and acquistions (M&A) deals will increase.

“Public listings will improve public disclosure, corporate governance and valuation. The insurance sector is highly competitive and is already witnessing M&A activity. Additional FDI capital inflows, IPOs and improved corporate valuations will likely further accelerate M&A activities in the sector,” Swiss Re said.