The life insurance industry in India is set to grow at a compound annual growth rate (CAGR) of 10.3% from Rs 7.0 trillion ($92.3 billion) in 2021 to Rs 11.4 trillion ($150.6 billion) in 2026, in terms of gross written premiums, forecasts GlobalData, a leading data, and analytics company.
Anjuli Shrivastava, Insurance Analyst at GlobalData, comments: “The life insurance industry in India is witnessing a significant post-pandemic growth, supported by growing awareness, increasing demand for group policies, and a favorable regulatory environment. Furthermore, the life insurance industry is set to grow by 10.2% in 2022 driven by the development of digital distribution channels and product innovation.”
During the last few years, Indian life insurers have witnessed strong growth in the sales of group life insurance policies. The Life Insurance Corporation of India (LIC), the largest life insurer in the country, with 63.2% market share, recorded 12.7% growth in group life premiums in FY2021 while individual life premiums declined by 2.8%.
Shrivastava adds: “Private insurers are also increasingly offering group life policies as an employee benefit. Such policies, where the risk pool is diverse leading to lower premiums, are cost-effective employee retention measures.”
The government’s push to increase life insurance penetration by selling life products to low-income customers through Pradhan Mantri Jeevan Jyoti Bima Yojana has also supported the growth of life insurance in India.
“Positive regulatory developments have supported product innovation in the life insurance industry. For example, IRDAI relaxed product approval with the expansion of the ‘Use and File’ process to include life products. Earlier, under the ‘File and Use’ policy, life products required regulatory approval before their launch,” says Shrivastava.
Strengthening digital distribution channels has been another focus area for life insurers. The COVID-19 pandemic has compelled insurers to develop and increase the digital distribution of their products and gain direct control of customer relationships. In March 2022, LIC announced plans to increase its focus on digital channels after losing market share to private insurers.
Shrivastava concludes: “India’s life insurance industry is forecast to witness double-digit growth over the next five years, twice the global average of 5.5%. The government’s initiatives to increase penetration, positive regulatory developments, and growing awareness will support the uptake of life policies.”