The latest market snapshot from GlobalData;
India’s life insurance industry is set to grow at a compound annual growth rate (CAGR) of 10% from INR9.3 trillion ($151.7 billion) in 2024 to INR13.5 trillion ($216.1 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.
According to GlobalData’s Insurance database, after slowing down in 2023, the Indian life insurance industry is expected to regain momentum in 2024 due to the increase in demand for traditional life insurance policies. Additionally, new regulations emphasizing inclusivity and advancements in insurtech are expected to facilitate the introduction of new products and expand insurance coverage, further supporting industry growth.
Aarti Sharma, Insurance Analyst at GlobalData, comments: “As inflation persists above the 4% target, the relatively high-interest rate environment with a 6.5% key policy rate is anticipated to remain unchanged throughout 2024. This higher interest rate, combined with the positive economic outlook, will bolster the introduction of new products and drive demand for non-linked life insurance policies.”
Non-linked insurance policies are expected to account for 87.5% share of the total life insurance GWP in 2024, and the prevailing high interest rate will aid insurers and policyholders in reaping better investment results. Non-linked insurance policies are expected to record a CAGR of 10.4% over 2024–28.
Moreover, the International Monetary Fund (IMF) revised India’s GDP growth projection by 30 basis points to 6.8% in 2024 and 6.5% in 2025, supported by a robust domestic demand and a growing working-age population. The positive economic outlook will support growth in the life insurance industry.
Aarti continues: “New regulations promoting digitalization and inclusive insurance will create new business opportunities for insurers. Increasing focus on improving insurance access in rural and underserved areas will also help in increasing insurance penetration.”
The Insurance Regulatory Authority of India (IRDAI) issued guidelines to expand insurance coverage in rural areas in March 2024. As per the guidelines, which came into effect from April 1, 2024, life insurers have been directed to insure a certain number of lives across gram panchayats under individual or group policies. In the first year, each life insurer must cover at least 10% of lives across 25,000 gram panchayats. This initiative will help in increasing life insurance uptake in rural areas.
Insurtech developments and digitalization to ease insurance access will also support life insurance growth. The approval of Bima Sugam, a digital insurance marketplace, in March 2024 is likely to be a massive game-changer in the Indian insurance industry. The website is a one-stop end-to-end insurance solution for all stakeholders, linking insurers, intermediaries, and customers. It is expected to be launched over 2024–25, as part of IRDAI’s aim to insure the entire population by 2047.
Furthermore, Bima Sugam will enable comparison of life insurance products of all insurers, which will lead to competitive pricing and prompt insurers to launch affordable and customized insurance policies.
Insurers are also adopting technology to improve services with the use of mobile apps and chatbots. Insurers’ adoption of technologies like artificial intelligence (AI), blockchain, and machine learning is aiding in the faster processing of claims, and identifying fraudulent claims. AI-powered chatbots and virtual assistants engage with customers in real time, answering queries, providing information about insurance products, and assisting in the purchase process. This helps to improve the customer experience and boost sales conversion rates.
Aarti concludes: “The Indian life insurance industry is undergoing significant transformation with the increasing adoption of technology by insurers and digitalization initiatives by the government. With favorable economic conditions and regulatory reforms, the life insurance industry in India is set for sustained growth over the next five years.”
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