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