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