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India's Regulator looks at increasing life insurance penetration & density

10 May 2016

Axco Insurance Information Services (Axco) has released its latest country report on India showing a sustained growth in the country's gross written life insurance premiums.   First year premium figures to 30 November 2015 are reported as INR 3,281 billion (US$50,711 million) representing an overall 4.39% increase compared with the previous year.

In terms of new production, individual business accounted for 39.7% of life premium in the period to 30 November 2015, showing a decrease in single premium business compared with the previous year, but a year on year increase in regular premium. 

State-owned Life Insurance Corporation (LIC) continues to dominate the market with a market share of 73.05%, whilst ICICI Prudential, HDFC Standard and SBI Life remain market leaders among the 23 private-sector players with market shares of 4.67%, 4.52% and 3.92%.

At 2.51% penetration remains low for life insurance in India, albeit higher than for non-life and personal accident and healthcare. It is one of the regulator's aims to increase insurance penetration and density, in particular through marketing in rural and semi-urban locations. Already insurers are obliged to meet certain rural and social sector sales obligations as well as sell a certain volume of microinsurance products, and changes to regulations in 2015 may assist with penetration. Changes allowing banks to operate as corporate agents for multiple insurers aim to increase sales over a wider network.

The number of internet users in India is estimated to be 402 million, a growth of 49% from 2014.  Since 2009, when AEGON Life became the first insurer to sell term plans online, use of the internet and e-commerce continues to grow at a rapid place and insurers embrace technology in their distribution methodology.   On 3 July 2015 the IRDAI published an order stating that life and general insurance groups would be set up with the purpose of identifying opportunities for promoting e-commerce in the insurance sector.

The outlook for the sector is positive, with future growth in premium expected to be enhanced by a positive economic environment.