India’s Life Insurance Market Set for Rapid Growth
India’s life insurance market is on the cusp of a significant transformation, with projections indicating a compound annual growth rate (CAGR) of 10.5% over the next decade. This growth trajectory not only outpaces the global average of approximately 5% but also positions India to become the second-largest life insurance market in Asia within ten years.
The Allianz Global Insurance Report highlights several factors contributing to this robust growth. Strong economic momentum, driven by an increasingly affluent middle class and rapid urbanization, is creating a higher demand for financial protection products like life insurance. The government’s proactive measures to liberalize the insurance industry, such as increasing the foreign direct investment (FDI) cap from 74% to 100%, have also played a crucial role.
Furthermore, the government’s capital support to Public Sector General Insurance Companies (PSGICs) during FY 2019-20 and FY 2021-22, amounting to ₹17,450 crore, has helped state-owned insurers return to profitability. This financial backing has been instrumental in revitalizing the industry.
While India’s growth is remarkable, the global life insurance industry is expected to grow at a steady 5% per annum, driven by increasing awareness and improvements in pension systems, particularly in the Western world and North America. India’s outlier status can be attributed to its young population, high digital capabilities, and growing share of the insurance industry.
The Property and Casualty (P&C) segment is also anticipated to show steady growth, with a projected CAGR of 4.5% towards 2035. This growth signifies an increasing need for better protection across various sectors and societies globally.
The report also notes that rising interest rates worldwide may enhance the profitability of the life insurance business, especially in countries like India where both public and private companies are expanding their coverage.
With its strong economic fundamentals, favorable regulatory changes, and increasing awareness about life insurance, India is poised to become a life insurance superpower in the next decade. The country’s leadership in the life insurance market is not just a projection but a rapidly unfolding reality.
