New Delhi [India], January 7 : The life insurance sector in India is at an "inflexion point" and is poised to grow due to a variety of good reasons. Financial services company Centrum Broking in a report asserted that it remains constructive on the life insurance industry owing to favourable macro factors.
The life insurance industry is set to grow due to an increase in the share of financial savings in household savings, per capita income increase, an increase in the working-age population, and an underpenetrated industry, Centrum said.
India aims to achieve 'Insurance for All' by 2047, and regulator Insurance Regulatory and Development Authority (IRDAI) is committed to it.
According to the Centrum report dated January 6, private players have been able to gain a higher market share with their share in the individual APE (Annual Premium Equivalent) increasing from 56 per cent at the end of 2017-18 to 68 per cent at the end of Q2 2024-25.
State-owned major LIC has maintained a 32 per cent market share over the last few quarters. Bigger players like SBI Life and HDFC Life have increased their market share over the last few years, Centrum said.
"The listed players command a combined market share of 60 per cent in the private space," as per Centrum report.
Due to various policy measures, financial inclusion in India has significantly improved over the years. Currently, over 80 per cent of Indian adults have a formal financial account, compared to approximately 50 per cent in the early 2010s. This increased financial inclusion also helped the insurance sector.
Also, bancassurance arrangements are playing an important role in the growth of the insurance sector.
"Bancassurance plays an important distribution part especially for the private players though LIC is also now focusing on bank partnerships," said the report.
Bancassurance refers to the agreement between a bank and an insurance company through which the bank sells the insurance product of the concerned insurance company to its customers.
Separately, in November 2024, the central government floated a few proposals for the insurance sector, including raising the FDI limit in Indian insurance companies from 74 per cent to 100 per cent, and enabling an insurer to carry on one or more classes of insurance business and activities.
Further, the government had proposed amending certain provisions of insurance laws to ensure the accessibility and affordability of insurance to citizens.
A significant portion of India's citizens and insurable assets remain uninsured, increasing the risks of high out-of-pocket expenses, and placing a considerable burden on public finances.
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