India ranks 10th largest Insurance market in the world, the total premium volume stands at 2nd largest in the emerging market. The premium volume was $127 billion in 2021, with 76% attributed to life insurance, & 24% to non-life insurance (general insurance), marking a growth rate of 13.5% as opposed to the global average of 9%. The market share is said to be at 1.9%. Future projection indicates an increase in the premium of 9% annually for the upcoming decade.
The penetration level of insurance backs the growth trajectory of the insurance industry, as by 2021 it grew to 4.2% compared to 2.7% in 2000. As per the Swiss Re, in 2023-24, penetration is expected to be at 3.8%. The overall growth projection puts India in a position of one of the fastest-growing markets in the coming years, precisely the 6th largest by 2032. IRDAI aims to make insurance available for all in India, by 2047, While making the industry the center of the global attraction.
What Is An Insurance Plan?
An insurance plan basically means a contract or an agreement between an individual and an insurance provider. An Insurance Provider is called an insurer and the individual who opts for it is called the insured. Through the agreement, the insurer offers assurance or financial security to the insured in exchange for a certain amount of money which can be referred as a premium.
The Importance of an Insurance Plan:
In this fast-paced world where everything runs at high speed, people often forget to spare time, to take care of themselves or to think about their future. India has been a country where saving was the prime concern for every household. However as time changes the household net savings decreased, in the financial year FY23 it was 5.3% of the GDP, the lowest in the five decades.
Between the FY12-FY22 the net financial savings of Indian households was 7-8%. Without savings, dealing with the unfortunate event can be stressful as you need some financial help. This highlights the importance of having an insurance plan that can play a pivotal role in combating uncertain moments in life. Having an appropriate insurance plan can provide you with much-needed financial relief in the event of emergencies. Such as hospitalization, vehicle emergencies, and property loss. It also helps alleviate the financial burden on the family if any unfortunate event results in the death of the sole breadwinner.
Different Types of Insurance Plans:
The Insurance Industry is vast because of the wide range of plans it offers. People are becoming increasingly aware of its importance, and they are more likely to opt for a suitable plan. However, one must be aware of the requirements they want to opt for an insurance policy. Therefore having a broader knowledge about different plans is crucial.
The variety of insurance plans can be categorized mainly into two groups, Life Insurance & General Insurance.
- Life Insurance:
Life Insurance refers to various forms of insurance plans where the beneficiary receives a total sum of the amount in exchange for the premium paid till a certain time. The penetration level of life insurance in India stood at 3.2%. Which is on the double rate in emerging markets, higher than the global average. The projection for penetration level in 2023-24 is 2.9%
Different Types of Life Insurance:
- Term Life Insurance
~ In Term life insurance, the family of the insured receives the amount in the event of the death of the insured. But it has a time limit, unlike whole life insurance.
- Unit-Linked Insurance Plans
~ This insurance plan offers investment opportunities in stocks, bonds, and balanced funds, which will generate returns in the long term.
- Endowment Plans
~ An endowment plan is a branch of life insurance which gives coverage plus helps to grow the money. It can be used as savings that give fixed returns, can be used for child education home purchase or any other important event.
- Whole Life Insurance
~ Whole life insurance is different from term life as it provides coverage for the entire lifetime as opposed to term insurance which is for a specific time.
- Child Plan for Education
~ This plan helps parents to secure the educational future of their children. Integrating life insurance with savings, allows parents to make premium payments that grow into a lump sum intended for their child’s education upon maturity.
- General Insurance:
General insurance is a term in the insurance industry, where an insurance provider safeguards valuable assets. Like vehicles, and property, from risks such as theft, fire, and accidents. It also includes protecting one’s profession against liabilities or claims. The projection of penetration level for general insurance is expected to be at 1% in India. This Insurance sector has a projection growth rate of 8.3% where the premium of health insurance is anticipated to increase by 9.7%.
Different Types of General Insurance:
- Health Insurance ~
A Health insurance plan provides financial coverage for medical treatment, hospitalization, illnesses and injuries. In India, 514 million individuals have opted for health insurance by 2021, which is 37% of the population.
- Motor Insurance ~
Motor insurance or automobile insurance offers protection of vehicles plus 3rd party financial assistance, in the case of an accident. The motor insurance market in India is projected to achieve a value of USD 11.96 billion by 2024. With the anticipation to expand at a compound annual growth rate (CAGR) of 10.25%, reaching USD 19.48 billion by 2029.
- Property Insurance ~
Property insurance offers an array of insurance policies that protect property, and provide coverage for structural damage, theft of personal belongings, and liability protection. It includes homeowners insurance, renters insurance, flood insurance, and earthquake insurance.
- Professional Indemnity Insurance ~
Professional Indemnity insurance provides financial security & protection to the professional reputation of policyholders. Against negligence, errors, and omission while delivering professional service. The annual turnover of the indemnity insurance ranges from 0.25% to 5%, considering the standard risk factors & market competition. One of the sought-after indemnity insurance is Professional Indemnity for Healthcare Professionals, Due to the intricate and sensitive nature of the profession. The likelihood of negligence is significantly elevated in this field, making this coverage especially crucial.
Insurance providers:
As per the data from March 2022, there are a total of 67 insurers in India, which comprise 24 life insurers, 26 general insurers, 12 re-insurers and 5 stand-alone health insurers. The landscape of Insurers includes the Company, broker and agents. As per Moody’s forecasts insurance brokers will maintain a stable outlook due to robust organic growth and EBITDA margins. The organic growth of insurance brokers is anticipated to persist in the mid-single digits or higher range throughout 2024. As of July 2020, the IRDAI has licensed 468 insurance brokers. In India, brokers are the most popular channel for business, representing over 70% of commercial lines.
CoverYou! One-stop solution for all insurance needs!
CoverYou is a registered insurance broker with the IRDAI and offers a wide range of insurance policies with competitive premiums and comprehensive coverage. One of our standout policies is the Professional Indemnity plan, providing vital protection by covering legal expenses and compensation claims. Which can arising due to allegations of negligence for healthcare professionals.
Source:
Insurance Industry in India – Insurance Sector Market Analysis
India insurance sector growth pegged at 7.1% in 2024-28: Swiss Re
