India’s Life Insurance Market Projected to Outpace Global Growth
The life insurance market in India is expected to grow at a rate of 10.5% over the next ten years, significantly higher than the global average of 5%, according to a recent report by Allianz Global Insurance. This growth is attributed to increasing economic activity in India and government policies aimed at promoting insurance penetration.
The report highlights that while China is expected to remain a dominant player in the Asian region with a growth rate of 7.8% per annum, India is poised to be the real growth champion with its 10.5% annual growth rate. As a result, India is likely to overtake Japan and become the second-largest life insurance market in the region.
Government Initiatives Boosting Growth
To capitalize on the global insurance growth trend, India has taken significant steps, including raising the Foreign Direct Investment (FDI) limit to 100% from the previous 74%. Additionally, the government has infused Rs. 17,450 crore into Public Sector General Insurance Companies (PSGICs) between 2019-20 and 2021-22 to support reforms, enhance efficiency, and drive profitability.
The efforts seem to be yielding results, as Indian PSGICs witnessed a significant turnaround in the previous fiscal year, with all of them returning to profitability after historical losses. The government’s commitment to creating strong and competitive PSGICs is evident through the introduction of reforms, including regular monitoring based on key performance indicators.
Global Insurance Trends
The report also notes that Asia, led by China, will continue to be a growth engine for the global life insurance business, driven by the development of pension systems against the backdrop of accelerating demographic changes. Globally, the Property and Casualty (P&C) Insurance segment is expected to grow by 4.5% per year until 2035, driven by the increasing need for protection.
The life insurance sector globally is likely to grow at a Compound Annual Growth Rate (CAGR) of about 5.0% over the next decade, benefiting from higher interest rates. This growth is expected to boost demand in developed markets such as West and North America.
