By M.S. Sreedhar
As India gears up to become the most populous country in the world, surpassing China in the next few months, the insurance market is well positioned for rapid growth. Given the confluence of several factors ranging from India having one of the largest working-age populations, a stable economy despite a global recessionary environment, traditionally low penetration of financial products headlined by insurance, and a deeply connected digital ecosystem – all signalling an eminent sectoral growth in the making.
Post-pandemic, given the low per capita consumption, one witnessed tremendous growth in the insurance sector led by greater awareness amongst the public, higher accessibility, affordability and availability. New themes continue to emerge – from novel products to niche segments to deepening market presence – the Indian general insurance sector has continued to innovate. Better awareness, easier-to-understand products and higher customisation and affordability have led to sustained demand. The key focus in the future will be to take initiatives that enhance the coverage of this industry. In other words, we hope that the budget will help to unleash the growth focus for the industry.
One of the key item that the industry had been pushing for many years is to consider reducing the GST on insurance policies. The rate is 18%, which, if reduced to 5%, will further improve affordability and thereby help the industry to achieve improved penetration and growth of this sector.
One another item on our wish list would be to prepare for global warming through proactive allocations. The writing is clearly on the wall about the impending climate change and geological challenges. The droughts, floods, landslides, and earthquakes – all gained frequency in the past few years. These need to be planned for in terms of the expected risks and, maybe, need strict laws and tax sops for mandatory property insurance – both owned by private customers and public bodies.
General insurance in the past decade in India has expanded from mainly a motor vehicle-dependent segment to a more diverse health plus motor plus corporate verticals. Despite the double-digit growth (a CAGR of 17% over the past two decades), the sector continues to be at the launching pad – awaiting a booster dose to reach the next orbit. The potential is immense, and so is the hope.
(M.S. Sreedhar, MD and CEO, Royal Sundaram General Insurance Co. Ltd. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)
