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A Crash Course on The Indian Insurance Industry

By Bhavesh Mehta - Jan 16,2020
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A Crash Course on the Indian Insurance Industry

The insurance industry in India is at the crossroads of development. For any country and its economic development, having a well-developed insurance sector that is constantly evolving is a boon. And, if you are wondering what the reason is for this, the answer lies in the fact that this sector provides some long-term funds for the development of the country’s infrastructure as well as strengthening the risk-taking ability of the country. In terms of the global economic scenario, the rate at which economic growth has occurred in the past decade is a very significant development.

The insurance sector can be categorized into life insurance and non-life insurance products, which includes products like travel insurance and motor insurance. Besides the importance of insurance in the development of the country, it also plays a vital role in an individual’s well-being by financially protecting him/her. Bajaj Allianz motor insurance, available on Finserv MARKETS, helps in protecting you and your loved ones against any unfortunate incidents.

Insurance, Capital Markets and Related Terms

The financial market in India is mainly divided into the money market and capital market. It is the capital market that deals with long-term credit. What the capital market basically does is this: gather funds from some entities and then make them available to other entities that need those funds. This is how Indian capital markets improve the efficiency of transactions.

The insurance companies have a significant role to play in the financial markets. Insurance is a source of huge capital for any country’s economy and thus insurance companies have an enormous amount of impact on the business of financial markets in the growing economy. The premiums you pay for a travel insurance plan or a motor insurance policy financially protects you and helps the economy. With the dawn of digitization, you can buy travel insurance in a simple and hassle-free process on the Finserv MARKETS portal. A wide range of financial products, besides travel insurance and motor insurance, can also be bought through the Finserv MARKETS App. The intuitive app provides convenience along with a host of benefits like personalized offers and discounts.

What is Insurance?

By definition, insurance is a contract that is generally represented by a policy, wherein an individual or an entity gets some financial protection or compensation against losses. In a manner of speaking, we can say that insurance is one way of managing risks. So, when you buy insurance, you are transferring the cost of any potential loss to the insurance company against a premium/ fee. These insurance companies invest your funds in a secure manner so that they grow and when there is a claim, the payout can be made without any hassle. Swift payout is an important aspect of insurance. With Bajaj Allianz Motor Insurance, which can be bought on Finserv MARKETS, you are guaranteed of a quick settlement of claims.

The Indian Insurance Sector

Insurance, though tricky, is a vital part of the economy, as it helps in moving commerce and ensures stability in the business. The other important point to note is that the capital market growth is driven by the development of the insurance sector. Not to mention, insurance companies are one of the greatest employers in the world and a booming insurance sector can have a positive impact on the overall economy. The Indian insurance industry has been growing at a considerable rate after liberalization. Increasing wealth and overall economic growth are expected to propel the insurance sector in the country to US$ 280 billion by 2019-20. The penetration of insurance products in India has jumped to 3.69% in 2017 as compared to 2.71% in 2001.

Boosted by government schemes and measures, penetration is, indeed, growing at a rapid pace. To bring a large part of the population under insurance cover, the government announced the National Health Protection Scheme, which is expected to bring 100 million poor families under a Rs. 5 lakh insurance umbrella. What’s more, the government has eased foreign investment norms in the insurance sector at regular intervals. In the Union Budget 2019, the government increased the FDI limit for insurance intermediaries to 100% from 49% earlier. Foreign investors help in improving the financial condition of the sector and bring global best practices to the country. In 2017, the insurance industry witnessed 10 merger and acquisition deals valued at US$ 903 million.

The industry has grown in leaps and bounds with gross premiums touching a mammoth Rs 5.78 trillion in 2019. Life insurance contributed Rs 4.08 trillion, while non-life insurance made up Rs 1.69 trillion of the total premiums. Increasing awareness and tighter implementation of existing laws like mandatory car insurance have contributed to the growth of the non-life insurance segment. Rapid digitization and streamlined services and products are easily accessible online. For instance, Bajaj Allianz Car Insurance, available online on Finserv MARKETS, provides comprehensive coverage at affordable costs.

Growth of the Indian Insurance Sector

As per India Brand Equity Foundation (IBEF), over FY12–18, the premium from the new business of life insurance companies in India increased at a 14.44% compounded annual growth rate (CAGR) to reach Rs. 1.94 trillion (US$ 30.1 billion) and non-life insurance premiums increased at a CAGR of 16.65%. As per the figures available for FY19, the premium from new life insurance business increased 10.73 per cent year-on-year to Rs 2.15 trillion (US$ 30.7 billion).

The Indian life insurance industry is likely to expand 12-15% every year for 3-5 years. As per the figures available for FY19, total premiums collected by non-life insurers touched Rs 1.67 trillion (US$ 24.32 billion), growing 12.86% on-year. Increasing demand for insurance products and easy availability are contributing to the growth of the sector. One can buy Bajaj Allianz Car Insurance or Bajaj Allianz two-wheeler insurance directly on Finserv MARKETS with the click of a button. A wide range of additional insurance products can also be bought on the Finserv MARKETS App. You can speed up the claims process, get personalized offers and conveniently pay premiums through the app.

The insurance sector in India is well-penetrated and well-served by numerous life and non-life insurance companies. It is growing rapidly, backed by innovative distribution, new products and adequate publicity and promotion. Private-sector insurers are gaining ground, with non-life insurers’ market share jumping to 54.7% in FY19 from just 13.12% sixteen years ago. Similarly, private insurance companies made up 25.3% of the new business in FY19. Private insurers are at the forefront of introducing innovative distribution channels. One can buy car insurance, besides a variety of financial products directly through Finserv MARKETS, in a simple and hassle-free process.

With increasingly dynamic solutions coming into play, boosted by the age of digitization and a growing consumer market, insurance penetration in India is all poised to reach new heights. Indian consumers can now capitalize on the range of options at their disposal and rest assured that every vital aspect of their lives has a viable contingency plan.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522