March 8, 2018

Insurance Industry Analysis



Must know facts:

  • Insurance penetration reached 3.7 per cent in FY17 and is expected to cross 4 per cent soon.
  • Insurance industry classification – Life Insurance, Non-life/general Insurance. The insurance industry of India consists of 63 insurance companies of which 24 are in life insurance business and 39 are non-life insurers.
  • Insurance industry in India is regulated by IRDA (Insurance Regulatory and Development Authority).


Influencing Factors for price change:

  1. Changing dynamics of how ‘Insurance’ is being perceived across the world is a factor to look out for. Insurance companies needs to keep tandem with new age business/market dynamics & any news on this could trigger stock moves.
  2. Governmental insurance schemes like – Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Vaya Vandana Yojana, Pradhan Mantri Suraksha Bima Yojana, which is a Personal Accident Insurance plan, Pradhan Mantri Jeevan Jyoti Bima Yojana, which is the government’s Life Insurance plan.
  3. The Union Cabinet has approved the public listing of five Government-owned general insurance companies and reducing the Government’s stake to 75 per cent from 100 per cent, which is expected to bring higher levels of transparency and accountability, and enable the companies to raise resources from the capital market to meet their fund requirements. Any news flows on this could impact prices substantially.


Understanding the Industry:

Insurance industry plays a vital role in the Indian market. There are altogether 63 insurance companies that are serving both life insurance and general insurance products to the customers countrywide.

Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third party administrators servicing health insurance claims.

Out of 39 non-life insurance companies, five private sector insurers are registered to underwrite policies exclusively in health, personal accident and travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance.


Estimated Market Size:

The life insurance sector recorded a new premium income of Rs. 1.38 trillion in a year, i.e. April 2015 to March 2016. This indicated a dramatic growth rate of 22.5% in the premium income, whereas the general insurance sector centered on two-wheeler insurance policy (particularly) recorded a 12% of growth by receiving a premium income of Rs. 105.25 billion during the year, i.e. April 2016 to March 2017.

In the past 17 years or so, the insurance sector has risen at a compounded annual growth rate (CAGR) of 16.5 percent. The total insurance premium of the industry has jumped from Rs 45,397 crore in FY2001 to Rs 6.10 lakh in FY2018, according to the data provided by the Insurance Regulatory and Development Authority of India (IRDAI).

During the period, while the life insurance sector clocked a CAGR of 16.4 percent in case of general insurance it was a tad higher at 17 percent. The total life insurance premium has gone up from Rs 34,898 crore in FY2001 to Rs 4.6 lakh crore in FY2018 whereas general insurance premium has surged from Rs 10,499 crore to Rs 1.51 lakh crore.

While five states namely Maharashtra, Tamil Nadu, Karnataka, Delhi UT and Gujarat contributed 68 percent of total health insurance premium, the rest 31 States/UTs have contributed 32 percent of the total Health insurance premium.

Road Ahead:

There are several changing dynamics of how ‘Insurance’ is being perceived across the world. As one can understand – Financial savings of the household sector is an important pointer to watch out for & this factor alone drives the need for insurance. As per IRDA annual report 2017/18 – Domestic saving declined to 29.6 percent of gross national disposable income (GNDI) in 2016- 17 from 30.7 percent in 2015-16. Household financial saving – the most important source of funds for investment in the economy declined to 6.7 percent of GNDI in 2016-17, down from 8.1 percent in 2015-16.

The future looks promising for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. India with 3.69 per cent penetration rate in the insurance sector offers greater penetration potential when compared to global average of 6.2 per cent

The country’s insurance market is expected to quadruple in size over the next 10 years from its current size of US$60 billion. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance.


Top Stocks in the industry:

Pure Life Insurance – ICICI Prudential, Max Financial Services

Life/Non Life – HDFC Standard Life, Bajaj Finserv, Aditya Birla Nuvo, Reliance Capital, Max India.

(Please note above stocks are not recommendations, they are purely for information purpose only)

Information Source / References: IRDA,IBEF, The Economic Survey 2016–17 & 17/18, Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry, Union Budget 2017–18, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports,

More Research Articles:

Agriculture Related Industry Analysis,        Automobile Industry Analysis,         IT Industry Analysis,         Banking Industry Analysis,      Courier-Logistics Industry Analysis,       Education Industry Analysis,         Manufacturing Industry Analysis,        RealEstate Industry Analysis,       Healthcare & Hospitals Industry Analysis,         Telecommunications Industry Analysis .. Choose from Menu for Research on 30+ industry sectors


Knowledge Seekers Paradise: PDF DOWNLOAD’s of HANDBOOKs released by Government of India:

RBI Hand book

RBI Handbook 2018

RBI Handbook 2017-18






Government Schemes Announced in Budget 2018

Government Schemes Announced in Budget 2018

Government Schemes Announced – Budget 2018-19







Economic Survey 2018 – Volume 1 & 2


error: Content is protected !!