The industry has of late achieved a yearly growth rate within 32 and 34 percent and this makes it the 5th best among emerging economies around the world. The various entities of the industry are also bringing out newer products on a regular basis to attract their customers.
As per rules, the upper limit of foreign direct investment permitted in this sector is 26 percent. However, this has to be done through the automatic route and the investor needs a license from Insurance Regulatory and Development Authority (IRDA).
At present there are 22 life insurers in India. The IRDA has recently taken away the tariffs of the interest rates and this has provided insurers greater independence when it comes to deciding the price of their insurance policies. The insurance industry has also become more competitive as a result.
Yet another important factor affecting this sector has been the recent financial meltdown.
India insurance industry growth in last few years
The life insurance companies have performed the best when it comes to growth with an increase of almost 70% in new premium that has been collected in the initial 5 months of 2012.
As per IRDA data, in April-August 2010 the insurance companies earned $11.73 billion in new premium - in the corresponding period in the previous year the amount stood at 6.9 billion dollars.
LIC, a state held insurer, had been the biggest profit maker at that time with an addition of 88% to their existing business. The privately owned insurers together had seen a leap of 34% to their policy sales.
ICICI Prudential earned 576.60 million dollars at that time. During April-August 2009 SBI Life had earned $379.20 million in sales of new policies and that figure went up to $531.87 million in the corresponding period in 2010 making it an increase of 40%. HDFC Standard Life also experienced a good growth of 54% in new sales.
IRDA data shows that between April and October 2010 the general insurance industry experienced a year-on-year growth of 22.76% with regards to underwritten gross premium.
The total value of that premium was 5.29 billion dollars while the same figure stood at $4.31 billion in April-October 2009. For the public sector companies the year-on-year growth rate was 21.09 percent between April-October 2010 and April-October 2009.
In the same period the privately held insurers saw an increase of 25.19 percent in terms of premium collected. Among the publicly owned entities, New India Insurance was one of the better performers with a premium income of 916.77 million dollars in April-October 2010.
At the same period in 2009 they had earned 770.25 million dollars which implies a growth rate of 19.04%. The IRDA Summary Report of Motor Data of Public and Private Sector Insurers 2009-10 states that in the same period almost 28.4 million policies were sold and the aggregate worth of premium collected was $2.31 billion.
The health insurance sector, according to the RNCOS' research report named "Booming Health Insurance in India" posted unprecedented growth rates in 2008-09 and 2009-10. The report also estimates that between the 2009-10 and 2013-14 the sector would see a compound annual growth rate (CAGR) of at least 25%.
India insurance industry - market share of leading companies
The following table shows the market share of top insurers in India in the period till April 2011:
| Company | Approximate market share |
| LIC | 50% |
| ICICI | 10% |
| SBI | 5% |
| Bajaj | 4% |
| Reliance | 5% |
| HDFC | 6% |
| Birla | 4% |
| Max New York | 3% |
| Tata | 2% |
| Met Life | 1% |
| Kotak | 2% |
| Others | 8% |
In terms of policies sold following are the top insurers in India:
| Company | Policies sold till December 2011 (approximate figure) |
| LIC | 20404281 |
| Future Generali Life | 100143 |
| ICICI Prudential | 785938 |
| Met Life | 98904 |
| Reliance Life | 698109 |
| Star Union Dai-ichi | 82037 |
| Bajaj Allianz | 640483 |
| Shriram Life | 73490 |
| Birla Sunlife | 589855 |
| Bharti AXA Life | 69151 |
| SBI Life | 491927 |
| Aegon Religare | 47332 |
| Max New York | 405662 |
| IDBI Federal | 45833 |
| HDFC Standard | 397408 |
| Canara HSBC OBC Life | 44899 |
| Tata AIG | 199275 |
| DLF Pramerica | 43299 |
| Kotak Life Insurance | 199614 |
| IndiaFirst | 38498 |
| Aviva | 100216 |
| Sahara Life | 36228 |
| Edelweiss Tokio | 1968 |
India insurance industry - some key findings
Following are some important findings from World Bank regarding the condition of insurance industry in India:
- Between 2005 and 2010 the yearly GDP growth was approximately 8.56%
- At the same time, the ratio of gross savings to GDP was 33%
- Middle class saw the quickest growth
- The life expectancy rate of people went up and urban development happened at almost 54%.
- In 2010 rate of premium growth came down to 4.2% and compared to global standards the premium share was pretty low
- Major operational issues for insurers were expenditure control, claims settlement procedures, improving investment yields, and capital requirements
- In the 2010-11 fiscal the life insurance industry grew by 4.20% while the general insurance industry increased by 8.10%.
- During that time the paid-up capital (private total) for the life insurance sector was INR 236.57 billion while the paid-up capital (industry total) was INR 236.63 billion.
- In 2010-11 the paid-up capital (private total) for the general insurance sector was INR 39.56 billion while the paid-up capital (industry total) was INR 67.06 billion.
- In 2010-11 the operating costs of privately owned life insurers was INR 159.62 billion while the total life insurance industry expense was INR 329.42 billion.
- In the same time the privately owned general insurers spent INR 39.32 billion from an industry total of INR 106.20 billion.
- In 2010-11 the privately held life insurers paid benefits and claims worth INR 312.51 billion while the industry aggregate was INR 1425.24 billion.
- At the same time the private general insurers paid benefits and claims worth INR 99.37 billion while the industry total was INR 295.36 billion.
As per IRDA, the composition of the Indian insurance industry by March 2011 could be mentioned as such:
General insurance
| Category | Number of organizations |
| publicly owned general insurers | 4 |
| private insurers completely owned by an Indian business organization | 1 |
| specialized general insurers | 2 |
| private insurers' JV with international insurers | 14 |
| Specialized health insurers | 3 |
Life insurance
| Category | Number of organizations |
| publicly owned life insurers | 1 |
| private insurers' JV with international insurers | 21 |
| private insurers completely owned by an Indian business organization | 2 |
India insurance product composition
Following is an approximate representation of the product composition of India's insurance industry:
General insurance
| Product | Percentage |
| Engineering | 4 |
| Motor OD | 27.63 |
| Motor TP | 14.94 |
| Health | 22.58 |
| Aviation | 1.08 |
| Liability | 2.40 |
| Personal accident | 2.63 |
| Fire | 10.91 |
| Marine | 5.97 |
| Others | 7.37 |
Life insurance
| Product | Percentage |
| Non linked life individual | 21.70 |
| Non linked gen annuity group | 4.33 |
| Non linked gen annuity individual | 0.85 |
| Non linked pension group | 4.22 |
| Non linked pension individual | 0.25 |
| Non linked health | 0.09 |
| Linked insurance | 55.01 |
| Riders | 0.01 |
| Linked life group | 13.54 |
India insurance industry major problems
Following are some of the major problems plaguing the insurance industry in India:
- Focus on actuarial pricing
- Regulatory misunderstanding
- Investment regulations
- Solvency regulation
- Claims settlement procedures
- Data clarity
- Distribution channel issues
Experts are of the opinion that around the world the insurance industry contributes around 4.5% to national GDPs. They have questioned the logicality of opinions that in India the contribution can be higher saying that there are other important sectors like education, defense, and health that cannot be undermined in this context.
They have ruled out possibilities that the sector can contribute 10% to India's GDP. The Chairman of IRDA, Hari Narayan has ruled out any such possibility asking if India's GDP growth will be that much in the next few years ahead.
The IRDA states that in India land and gold are more preferred as forms of investment. Narayan feels that if the insurance sector is to do well in terms of contribution to GDP then more people should be convinced about its capability to provide good ROI (return on investment).
Why are more people taking insurance policies?
One of the major reasons for an increasing number of people availing insurance policies in India is the growing level of awareness. People nowadays value their lives, their health, and their families even more than before given the tough economic circumstances and so want to make sure that everything is fine even if they are not there.
Yet another reason for the growing popularity of insurance policies is the benefit of tax exemption that is provided to family oriented and individual plans. Majority of the private insurers also provide lucrative returns and are now being availed by a section of the Indian society with greater disposable earnings.
There is an aspect of psychological comfort attached to the insurance policies as well - whenever an insurance is availed the policyholder can be more or less assured of a safe future for that particular part of his or her life.
Top Insurance Policies
Following are the featured insurance policies of various insurers in India:
| Company | Product |
| LIC | Jeevan Vaibhav |
| ICICI Prudential | ICICI Pru iCare |
| Reliance General Insurance | Reliance Private Car Insurance Reliance Travel Care for Students |
| Bajaj Allianz | CashRich Family Floater Health Guard Plan Car Insurance |
| HDFC Life | Click2Protect HDFC LIFE SMART WOMAN PLAN |
| Tata AIG Insurance | Tata AIG Motor Insurance Tata AIG Travel Insurance Tata AIG Wellsurance Family |
| Kotak Life Insurance | Kotak Assured Protection Plan Kotak Assured Income Plan Kotak Assured Investment Plan |
| Aviva | Aviva Health Secure Aviva i-Life |
| Future Generali | Future Generali Smart Life Future Generali Health Suraksha |
| MetLife | Retirement Plans Met Monthly Income Plan |
| Star Union Dai-ichi Life Insurance | Suraksha Kavach |
| Shriram Life Insurance | ShriLife Wealth Plus Money Back Shriram Ujjwal Life SP |
| Bharti AXA | Bharti AXA Life eProtect |
| Aegon Religare | iTerm |
| IDBI Federal | Termsurance Wealthsurance Childsurance Lifesurance Healthsurance Incomesurance Loansurance Homesurance Bondsurance Microsurance |
| Canara HSBC OBC Life Insurance | Dream Smart Plan Grow Smart Plan Future Smart Plan Secure Smart Plan Smart Sanchay Plan |
| DLF Pramerica Life Insurance | Income Rakshak DLF Pramerica Family Income DLF Pramerica Family First DLF Pramerica U-Protect |
| IndiaFirst Life Insurance | IndiaFirst Maha Jeevan Plan |
| Sahara Life Insurance | Sahara Vatsalya-Jeevan Bima |
| Apollo Munich Health Insurance | OptimaRESTORE |
| Star Health Insurance | Family Health Optima Star Unique Health Senior Citizen Health Insurance |
| IFFCO TOKIO General Insurance | Auto Protector Policy Individual Medishield Policy |
| New India Assurance | Householder's Policy Motor Insurance Policy Overseas Mediclaim Policy Fire & Machinery Policy Industrial All Risk Policy Shopkeeper's Policy |
| Oriental Insurance | Oriental's Motor Insurance Policy Happy Family Floater Scheme |
| National Insurance | Car Insurance |
| Cholamandalam MS General Insurance | Chola MS Private Car Chola MS Student Travel Chola MS Family Healthline |
| HDFC Ergo | Travel Insurance HDFC Ergo Health Suraksha |
| Universal Sompo General Insurance | Householder's Insurance Policy Shopkeeper's Insurance Policy Motor Insurance Policy Individual Health Bills |
| L&T Insurance | my:health Medisure Prime Insurance |
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