Look Towards A New Future

Oct 17, 2012

Trends and Opportunities in India Non-Life Insurance Market

The Indian non-life insurance segment registered significant growth during the review period, despite the global financial crisis in 2009. The increase was due to the favorable regulation for motor insurance such as compulsory third-party liability insurance and rising property prices in major Indian cities including Mumbai and Bangalore. This was further encouraged by rising income levels, which increased demand for motor and agriculture insurance. These factors are expected to enable the segment to grow at a CAGR of 11.3% over the forecast period.

The segment is dominated by public sector insurers, and the combined market value of all the private non-life insurers is less than half of the total non-life insurance written premium. Public sector insurers are expected to continue to dominate the segment over the forecast period, whereas private non-life insurers are expected to gradually increase their market shares. Although the Indian non-life segment grew rapidly during the review period, it remains largely underpenetrated because of various limitations, such as poor awareness of the benefits of non-life insurance, low penetration in rural areas, and a lack of an effective distribution model.

Surging automobile and property and construction markets

The Indian industrial and commercial construction market is expected to grow at a CAGR of 11.1% over the forecast period, while the residential property market is projected to achieve a CAGR of 9.8%. In addition, the automobile market is anticipated to grow at a CAGR of 9.7%. With the compulsory auto insurance law and increasing awareness of property insurance, the non-life segment will be driven by the growth in these industries.

Motor insurance is expected to remain the largest category

The motor insurance category is expected to further increase its dominance in the non-life segment over the forecast period. In 2011, the motor insurance category accounted for 52.5% of the total Indian non-life insurance segment, while the property category accounted for 36.6%, and the marine, aviation and transit category had a considerably lower share of 8.5%%. The motor insurance category’s share is expected to increase to 54.5% in 2016, primarily due to the rising automobile sales and consumer income levels.

Increase in FDI limit will be a key growth factor

The Insurance Regulatory and Development Authority’s (IRDA’s) proposal to increase the foreign direct investment (FDI) limit for insurance companies from 26% to 49% will be a key growth driver for the non-life insurance segment. The increase in FDI is expected to generate an increase in equity investments by foreign insurers, which is likely to result in an improvement in the quality of services of Indian insurers. The increased equity can also be used to develop the penetration and effectiveness of the insurance distribution network in India. 

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Report Details:
Published: October 2012
No. of Pages: 256
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