GlobalData has revised India’s insurance forecast in the aftermath of the Covid-19 outbreak. An analysis of GlobalData’s Global Insurance Database reveals that Indian life insurance industry is expected to grow at a compound annual growth rate (CAGR) of seven per cent over 2019-2024, driven by favourable demographic factors, and economic recovery expected over the second half of 2021.
Manisha Varma, Insurance Analyst at GlobalData, commented: “A high number of Covid-19 related deaths in the last year has increased awareness for life insurance in India. Easing of lockdown restrictions and increased adoption of digital distribution will further support the growth.
“Digital distribution got a much-needed push as insurers are focusing on ensuring uninterrupted sales support and customer service. Insurers are also offering new products with Covid-19 specific benefits to push sales. In January 2021, new business premiums grew by year-on-year 3.7 per cent to INR213.9 billion.”
Positive regulatory developments
Positive regulatory developments seen in the last six months are expected to support life insurance growth. For instance, increasing FDI limit in insurance from 49 per cent to 74 per cent will encourage foreign insurers to enter the market and bring additional capital.
Additionally, in April 2021, the regulator permitted insurers to invest up to 10 per cent of the outstanding debt instruments in a single Infrastructure Investment Trusts and Real Estate Investment Trusts issue. The additional investment options will strengthen the financial position of insurers and encourage them to expand their product offerings.
Varma concluded: “With a pick-up in vaccinations, the Indian economy is expected to recover over the second half of the year. Increasing consumer awareness along with favourable demographics and regulatory environment will support the demand for life insurance policies.”
A survey by reinsurer Swiss Re highlighted an increasing trend among Indian consumers to buy insurance digitally, especially through payment apps.