Look Towards A New Future

Oct 17, 2012

Reinsurance Trends and Opportunities in India to 2016

In terms of gross written premiums, the Indian reinsurance market value grew at a CAGR of 12.2% during the review period (2007−2011). The increase was partially due to the robust growth posted by the insurance industry, coupled with the growing participation of foreign reinsurance companies. This was further supported by India’s positive economic growth, increasing employment rates and rising levels of life expectancy. These indicators are expected to support the Indian reinsurance segment over the forecast period (2012−2016).

Robust insurance industry growth fuels reinsurance segment
The Indian reinsurance segment’s growth is dependent on the growth of the country’s life, non-life and personal accident and health insurance segments. However, the percentage of reinsurance ceded is higher for non-life and personal accident and health insurance than for life insurance. The reinsurance segment posted a CAGR of 12.2% during the review period, which was driven by growth across all segments. During the review period, the insurance industry as a whole grew at a CAGR of 16.9%. Life insurance which constitutes 86.0% of total insurance industry registered a similar CAGR of 16.9% while non-life insurance registered a CAGR of 12.8% and personal accident and health insurance achieved an impressive CAGR of 33.4%.

General Insurance Corporation (GIC) is anticipated to control the reinsurance segment

The majority of Indian reinsurance is sourced from the General Insurance Corporation (GIC) and European reinsurers with bases in Asia. Over the forecast period, it is expected that GIC will retain its market-leading position in the Indian reinsurance segment. However, the growing interest of overseas reinsurers to participate in the Indian reinsurance segment is anticipated to intensify the level of competition. 

Facultative reinsurance product category will continue to dominate the reinsurance segment

The facultative reinsurance product category accounted for 51.7% of the Indian reinsurance segment in 2011, while the treaty reinsurance category had a relatively lower market share of 48.3%. The share of treaty reinsurance products is expected to increase to 54.5% in 2016, due to floods in Uttarakhand.

Growing interest of foreign reinsurers to intensify competition over the forecast period

Over the forecast period, the level of competition in the Indian reinsurance segment is expected to increase following the IRDA’s proposal to permit foreign reinsurance companies to establish branches in the country. As it stands very few foreign reinsurance companies operate in India, and those which do provide services to Indian insurance firms generally operate outside the country. However, leading global reinsurance companies Berkshire Hathaway Re entered the reinsurance segment and will be the lead reinsurer for Bajaj Allianz and National Insurance. Other leading global reinsurers such as SCOR Re and Asia Capital Re increased their exposure to India during the review period. The growing interest of global reinsurance companies is expected to intensify competition over the forecast period.

Report Details:
Published: October 2012
No. of Pages: 92
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