Robust medium term outlook
The Indian insurance industry is expected to grow to US$280 billion by FY 2020 with the government’s flagship Ayushman Bharat, the National Health Protection Mission (AB-NHPM), and other growth drivers like rising disposable incomes, presence of global players and easing of the regulatory regime, helping penetration of the insurance culture in the country, according to an ASSOCHAM-APAS study.
Overall insurance penetration in the country reached 3.7% in 2017 from 2.71% in 2001. Gross premium increased from Rs.3.2 trillion (US$49 billion) in FY12 to reach close to Rs 5 trillion (USD72 billion) in FY18, said the study jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and APAS.
“Push by the government and the regulator has helped increase the penetration of the insurance, as spread of schemes have also increased. Several factors such as growing middle class, young population and increasing awareness towards the need for protection and retirement planning would enable the growth further,” the latest study said.
It said, Ayushman Bharat, the ambitious scheme of the government, covering 100 million poor and vulnerable families with a cover of Rs.5 lakh per family of tertiary care and hospitalisation would be a game changer for the insurance industry, as it would have a great multiplier impact on a host of allied sectors and create lakhs of new jobs.
The private sector companies, which presently hold close to 48% market share in the general insurance and 29% in the life insurance, would see a big growth in the opportunities. The private sector hospitals would also be major partners in the roll out of the countrywide scheme for which an initial sum of Rs.12,000 crore has been provided.
An effective implementation of the scheme will help the entire healthcare and allied sectors like pharmaceutical, diagnostics, medical devices, data management, quality accreditation and human resource management with the help of information and communication technologies across the value chain.
Taking stock of the present state of play, the ASSOCHAM study with the research firm APAS said that the domestic life insurance industry registered 11% year-on-year growth for new business premium in 2017-18 generating revenue of US$30 billion. The premiums for non-life insurance industry increased by 17.5% year-on-year in FY18.
The government has taken a number of initiatives to boost the insurance industry.
The Foreign Direct Investment (FDI) limit has been increased from 26% to 49%, while the regulator, IRDA, has allowed insurers investments up to 10% in additional tier 1 (AT1) bonds that are issued by banks to increase their tier 1 capital.
The medium-term outlook for the life insurance industry remains robust, with solid premium growth forecast over the next five years to 2023. fiinews.com