Listen to this article
A recent report released by the Boston Consulting Group and India Insurtech reveals that the Indian insurance industry must grow at an annual rate of 12-13% to achieve the 2047 Viksit Bharat goal.
The report projects the AUM of the insurance industry will reach USD 11 trillion or Rs. 930 lakh crore (in today’s term) by 2047. Currently, the insurance industry manages AUM of Rs.70 lakh crore in March 2023, says the report.
Here are some factors that could help the insurance industry grow:
- Currently the penetration of life insurance is 2.8% whereas the penetration of non-life is 1% indicating huge potential in the Indian insurance industry
- Also, health insurance has low penetration of 0.31%
- The working age population of India will grow to 112 crore
- Life expectancy will increase to 84 years in 2047
- The average household income will rise to Rs. 7.32 lakhs in 2030
- The Ayushman Bharat digital mission will also help in this regard, having provided data on 58.8 crore health accounts, 36 crore linked health records and 3 lakh healthcare providers
- Initiatives like Bima Sugam (a digital marketplace) and Bima Vahak (an accessibility and availability of insurance products) can lead to better distribution
Some challenges for the industry:
- Tier 1 cities contribute to 65% of insurance premiums, requiring greater penetration into tier 2 cities and beyond
- In terms of group insurance, India is lacking behind global standards. The global average for penetration in small companies (companies with less than 200 employees) is 70% while India has 25%