Indian insurance industry is expected to be one of the top 10 markets by 2025, projects Confederation of Indian Industry (CII).
The Indian insurance market is expected to reach USD 250 billion industry by 2025, predicts Confederation of Indian Industry (CII).
The CII report on ‘India Insurance Vision 2015: Building a USD250 billion customer centric and value creating industry’ has laid out the long term vision and aspirations for the insurance industry. The report was compiled by McKinsey & Company. It contains a fact-based view on the current state of the industry, its evolution over a period of time, key trends that will shape the industry in the next decade and the potential evolution.
The report predicts that Indian insurance industry is expected to be one of the top 10 markets by 2025.
The report recommends an inclusive growth for the industry over the next decade. This will enable life insurance industry to grow at 12% CAGR over next decade to reach USD 160 billion – USD 175 billion and general insurance to grow at 22% CAGR to reach a GWP of USD 80 billion.
“The insurance industry has the potential to grow three to five times in size over the next decade. For this to happen, policy action by the regulator, collaboration between players, individual player’s push to develop distribution and technical capabilities would be critical”, said Analjit Singh, Chairman, CII National Committee on Insurance and Pensions and Chairman, Max India, in a press release.
“Last few years have been challenging for the insurance industry with declining growth in life insurance and profitability challenges in non-life. However, an improving economy and a stable reformative government action plan can help drive significant growth and value-creation over the next few years”, said Sanjiv Bajaj, Co-Chair, CII National Committee on Insurance and Pensions and Managing Director, Bajaj Finserv Ltd.
To achieve the estimated target, the report has made a few suggestions:
Life insurance:
Policy intervention by regulator: Incentivize long-term behavior, continue to push product reforms, deepen access and reach by promoting and enabling efficient business models, revisit distributor compensation norms, strengthen supervisory approach to ensure a more healthy and stable industry structure.
Collected and coordinated action by industry: Raise the profile of life insurance for customers and distributors, invest in consumer awareness and education, define industry-wide performance standards for agency and institutionalize skill building.
Individual player actions: Build customer centric business (moving away from distribution centric business that dominated till date), product suite based on customer needs, fundamental shift in distribution model and focus on customer service.
General insurance
CII says that the regulator and policy makers will have to foster deeper penetration and enable use of common infrastructure, the industry will collectively need to build consumer awareness, co-sponsor common infrastructure, encourage appropriate market conduct and collaborate with other associated industries to create new market opportunities.
Individual insurers will need to build distinctive granular customer insight, upgrade to next gen technical capabilities and build operating models to drive better efficiency.
Health insurance
The report recommends that the regulator should accelerate distribution and product reforms, the government needs to expedite healthcare reforms across the complete value chain and service providers will need to invest in public-private partnership to build rural and semi-urban reach.
Finally, the industry will have to continue investing in distribution and upgrading their technical capabilities, suggests the report.
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