India’s life insurance market to surge 10.5% in 10 years—Global market trails at 5%: Report

Indeed, the life insurance market in India is due for a decade of disruption. The Indian life insurance market is anticipated to grow at a compound annual growth rate of 10.5%, significantly higher than the global average of approximately 5% as stated in the recently published Allianz Global Insurance Report. This prediction is a testament to India's vibrant economic and regulatory landscape, and it places India among the top performers globally.

India set to take the lead

The report predicts that India will also be the fastest-growing life insurance market in the region even as Asia continues to be the growth engine of the global insurance markets. Over the next ten years, despite China's continued superior growth in terms of absolute amounts with an approximate growth level of 7.8%, India is likely to overtake Japan, as it grows into the second largest life insurance market in Asia.

Why is India accelerating?

• Momentum in the economy: The need for financial protection products like life insurance is being driven by India's strong economic growth which is being aided by an increasingly wealthy middle-class and continued urbanisation.
• Changes in governance: The government has taken bold steps to open up the insurance industry. One of the most significant steps to take was to increase the FDI cap from 74% to 100%.
• Providing capital support: During FY 2019–20 & FY 2021–22 the government has provided ₹17,450 crore to support PSGICs. After years of losses, PSU insurers are seeing profits, at least in part due to these financial support payments.

The global picture

The increasing awareness and improvements in pension systems, particularly in the Western world and North America, will likely push the life insurance industry forward at a steady 5% per year on a global basis. India is an outlier due to their young population, high digital capabilities, and growing share of the insurance industry.

P&C segment is growing

While the life insurance market is important, the Property and Casualty (P&C) market would also be expected to show steady growth toward 2035, of 4.5% per year. This signifies the need for better protection across sectors and societies on a global basis.

The report also stated that increasing interest rates globally may help the life insurance business become more profitable, especially in countries like India, where public and private companies are adding coverage.

Lastly, India is at the forefront of the insurance evolution. India is leading the world not just in the life insurance market, but it`s soaring. With strong economic fundamentals, favourable regulatory changes, and increasing awareness, India is positioned to become a life insurance superpower over the next decade.