insurance secytore reforms

1. INSURANCE SECTOR IN INDIA
Submitted To : Neeraj Gupta
(CFA , CFP)
Submitted By : P K Antony
Rahul Malik
Rajat Yadav
Ravi Kirti Pal
Ruchika Chauhan
Sangita Toppo

2. INTRODUCTION
1) Growth Drivers:
India's insurance industry is booming due to rising incomes and
heightened awareness, growing at 32-34% annually.
2) Competition and Innovation:
Intense competition fosters innovation, resulting in new and diverse
insurance products.
3) Foreign Investment and Regulation:
Foreign Direct Investment (FDI) up to 26% is allowed, overseen by
the Insurance Regulatory and Development Authority of India
(IRDAI).
4) Market Structure:
The industry comprises 57 companies, with Life Insurance
Corporation (LIC) dominating the life segment and six public sector
insurers in non-life.
5) Stakeholders:
Various stakeholders, including agents, brokers, and administrators,

3. INTRODUCTION
6) Transformations and Developments:
Regulatory changes, product innovations, and strategic amendments
drive industry evolution.
7) IRDA's Mission:
The IRDA aims for 'Insurance for all by 2047', employing proactive
strategies to address industry challenges.
8) Government Support and Regulations:
Government initiatives and a supportive regulatory environment fuel
market growth and innovation.
9) Digitalization and Consumer Behavior:
Rapid digitization enables easy access to insurance products,
highlighted by increased demand during the COVID-19 pandemic,
emphasizing the industry's resilience.

4. MARKET SIZE
1) Non-Life Premium Growth:
a. Non-life insurance premiums surged by 14.86% to Rs.
1,43,802 crore (US$ 17.29 billion) in FY24, driven by
strong demand for health and motor policies.
2) Life Insurance Sector Dynamics:
a. Life insurers witnessed significant growth, with new
business premiums reaching Rs. 211,690.65 crore (US$
25.38 billion) in April-November 2023.
b. In FY23, life insurers collected Rs. 3.71 lakh crore (US$
44.85 billion) in first-year premiums, marking an 18%
increase over the previous year.
3) Key Players and Market Share:
a. SBI Life, HDFC Life, and ICICI Prudential Life led in
premium collections among private players.
b. LIC continued its dominance, contributing over 60% to the
total new business premium collection in FY23.

5. MARKET SIZE
4) Market Performance and Penetration:
a) The non-life insurance industry grew by 16.4% in FY23.
b) Insurance penetration in India was at 4.2% in FY21, with
life insurance penetration at 3.2% and non-life at 1.0%.
5) Future Projections and Technological Trends:
a) Premiums from the life insurance industry are expected to
reach Rs. 24 lakh crore (US$ 317.98 billion) by FY31.
b) India emerges as a significant insurance technology
market in Asia-Pacific, with substantial investments in
insurtech ventures.

6. RECENT DEVELOPMENTS
1) Market Expansion and Regulation:
a) Introduction of private companies in 2000 and subsequent FDI limit
increases to 74% in 2021 spurred sector growth.
b) New regulations allow insurers to launch health insurance products
without IRDAI approval, fostering innovation and market
responsiveness.
2) Technological Advancements:
a) Robotic Process Automation (RPA) and AI adoption on the rise,
enhancing data processing and customer service.
b) Policybazaar's PBPartners and Canara HSBC Life Insurance launch
mobile apps for streamlined operations and customer engagement.
3) Strategic Alliances and Acquisitions:
a) ICICI Lombard partners with Vega for road safety awareness and
NPCI Bharat BillPay for payment features.
b) HDFC Life acquires 100% shareholding in Exide Life Insurance,
strengthening its position in South India.

7. RECENT DEVELOPMENTS
4) Funding and Valuation:
a) Acko raises US$ 255 million in November 2021, reaching a
valuation of ~US$ 1.1 billion.
b) Probus Insurance secures US$ 6.7 million funding from a
Swiss impact fund in December 2021.
5) Expansion and Partnership Initiatives:
a) Willis Towers Watson acquires remaining shares in WTW
India, achieving 100% ownership.
b) PhonePe receives IRDAI approval as an insurance broker,
enabling insurance advice for its user base.

8. INVESTMENTS
1. Zurich Insurance Group's Acquisition:
a. Zurich Insurance Group to acquire a majority stake in Kotak
General Insurance, marking the first significant foreign investment
in India's insurance sector in eight years.
2. Strategic Partnerships:
a. Bajaj Allianz Life Insurance partners with City Union Bank,
expanding life insurance solutions.
b. ICICI Lombard collaborates with Airtel Payments bank to provide
cyber insurance.
c. ICICI Prudential Life Insurance ties up with NPCI Bharat BillPay
for the ClickPay feature.

9. INDUSTRY PERFORMANCE
1) LIC achieves record first-year premium income of
Rs. 56,406 crore (US$ 7.75 billion) in FY21.
2) Non-life insurers witness 16.4% growth in gross
direct premiums in FY23, with gross premiums
written off reaching US$ 31 billion.

10. ADVANTAGES

11. GOVERNMENT INITIATIVES
1. Tax Exemption on Life Insurance Policies:
a) The Union Budget 2023-24 proposes to limit income tax exemption on
proceeds of high-value life insurance policies.
b) Income from policies with aggregate premiums up to Rs. 5 lakh (US$ 6,075)
will be exempt from taxation, targeting better tax concessions.
2. Flagship Crop Insurance Scheme:
a) Pradhan Mantri Fasal Bima Yojana (PMFBY) drives significant growth in
premium income for crop insurance, aiding farmers against crop losses.
3. Healthcare Initiatives:
a) Ayushman Bharat (PMJAY) aims to provide Rs. 5 lakh (US$ 6,075) health
cover per family per year for secondary and tertiary care hospitalization.
b) Insurance cover provided to 44.6 crore persons under PM Suraksha Bima
and PM Jeevan Jyoti Yojana during FY23.

12. GOVERNMENT INITIATIVES
4. LIC IPO and Privatisation:
a) Indian government plans to sell a 7% stake in LIC for Rs. 50,000 crore (US$
6.62 billion) in 2022, the largest IPO in India.
b) General Insurance Business (Nationalisation) Amendment Bill passed in
August 2021 to allow privatisation of state-run general insurance companies.
5. Financial Sector Reforms:
a) FDI limit in insurance increased from 49% to 74% under Union Budget 2021,
promoting foreign investment.
b) Digital issuance of insurance policies through Digilocker announced by
IRDAI, enhancing accessibility and convenience.

13. FUTURE OUTLOOK
1) Regulatory Changes and Growth Projections:
a) Regulatory framework changes are expected to reshape the life
insurance industry's operations and customer engagement
strategies.
b) Anticipated annual growth rate of 14-15% for the life insurance sector
over the next three to five years indicates promising prospects.
2) IoT and InsurTech Advancements:
a) The scope of IoT in the Indian insurance market extends beyond
telematics, facilitating customer risk assessment and enhancing
service delivery.
b) Over 110 InsurTech startups are currently operational in India,
expected to significantly boost industry innovation and insurance
penetration.

14. FUTURE OUTLOOK
3) Government Initiatives and Policy Support:
a) Past government interventions have expanded the insurance sector's
scope, with ongoing schemes like PMFBY and PMJJBY ensuring
broad coverage for crops and youth at affordable rates.
b) Continued government support and policy initiatives are expected to
fuel industry growth further.
4) Demographic Factors and Market Dynamics:
a) India's demographic trends, including a burgeoning middle class,
youthful population, and increasing awareness of protection and
retirement planning, bode well for insurance sector expansion.
b) These factors, coupled with rising disposable incomes and changing
lifestyles, create a conducive environment for industry growth and
development.

15. THANK YOU