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Changing Climate for Growth.

Challenges and Opportunities.

The industry has witnessed a major disruption with the introduction of insur-techs. This has led to a better pricing and improved service levels including claims management. With this change, the industry has seen introduction of innovative products as well as coverage.

The last decade has been phenomenal for non-life insurance industry in India. There has been a transformation from being a protected and controlled industry into the current liberal and open architecture. Also, there has been a gradual shift from man to machine. The industry has welcomed and adapted to the technological changes with open arms, which, in turn has immensely benefitted the industry in terms of overall efficiency, faster response, delivery of products and service quality. Amendment to the age-old Insurance Act created more opportunities for foreign investors. Such amendments facilitated the listings of the insurance companies on the stock exchanges. Over the past few years, the industry has seen a couple of mergers and acquisitions in the private sector like L&T with HDFC Ergo and Apollo Munich with HDFC Ergo. Merger of three PSIJs is also under way.

The industry has seen a tremendous growth in the health insurance segment so much so that the number of standalone health insurers increased to seven today (operation of Reliance Health being suspended recently due to extremely low solvency margin). Crop insurance has yielded huge premiums owing to Pradhan Mantri Fasal Bima Yojana (PMFBY), leading to miscellaneous segment of the industry as one of the growth contributors. Distribution mechanism has seen a drastic change from person-to-person selling to online sales. The wider distribution channel has opened various options for a customer to choose from. Regulatory changes steered by IRDAI were supportive of the growth. With roll—out of the world’s largest mass health insurance scheme, Ayushman Bharat and the other schemes initiated by the Government of India in the recent past, awareness levels have increased resulting in improved penetration. The industry has witnessed a major disruption with introduction of insur-techs.

Total premium underwritten in this segment was Rs 64,455 crore in FY 2018-19 with a growth of nine per cent. While motor own damage premium recorded a minuscule growth of 0.5%, motor third party segment recorded 15% growth. However, from Q3 of FY 2018-19, this line of business started underperforming partially due to sluggish automobile sector. Motor insurance segment is becoming a lot easier and quicker with the help of artificial intelligence (A1) and smart-phones. Insurance companies are experimenting with A1 to procure business as well as for settlement of claims.


This has led to a better pricing and improved service levels including claims management. With this change, the industry has seen introduction of innovative products as well as coverage. Financial Year 2018-19 saw the non-life insurance industry growing at 11.3% while the Indian economy grew at 6.8%. Lower growth rate in the economy affected the growth in non-life industry also. Non-life insurance industry witnessed a growth of 13% in FY 2018-19 with a premium of 170,112 crore compared with 18% growth and a premium 150662 crore in FY 2017-18. The insurance industry has embarked on a radical transformation, stimulated by series of digital innovations. The industry is experiencing a growth in small ticket size products in all segments of general insurance like dengue insurance, fitness insurance ,travel insurance (rail and bus commuters), to name a few. Start -ups are coming up with innovative and affordable solutions suitable for millennial by offering non-conventional services like insurance

Liability insurance segment has recorded premium of Rs 447 crore registering growth of 19%. New India continues to market leader in this segment with 17% share followed by ICICI Lombard with 15% and Tata AIG with 14% share. Increasing number of bankruptcy cases and financial frauds has increased the demand for Directors and Officers (D&O) policies in the country. Banks are planning to increase their cover manifold. Revised Companies Act also requires all the listed companies to have D&O policy.


for fitness, mobile etc. There are several factors such as young population, growing middle class, increasing awareness, online services, which would augment the growth of the industry further. Health and motor insurances continue to dominate the industry with approximately 65% share in the total non- life insurance industry premium. The health insurance segment grew at in FY 2018-19.The launch of AB- PMJAY in September, 2018 has propelled the growth in this segment. Despite this, penetration levels are still abysmal vis-å- vis developed economies. In fact, those who are covered, are under-insured in some form or the other. Innovation in product design, services and distribution channels are the key factors to the growth. The industry players have brought in a lot of innovation. Still there is a long way to go.

In FY 2018-19 health and PA segment together account for 30% of the total industry premium. It recorded premium of Rs 50,891 crore with a growth of21%. Increasing cost of medical facilities makes it difficult to avail world-standard medical services. This can be overcome through purchase or provision of Health Insurance. With AB-PMJAY scheme, there would be increased penetration of health cover into lower income sections, giving them better access to enhanced healthcare. Rise of connected devices and sensor based technology are resulting in massive inflow of real-time data. Health Insurance sector makes use of this enhanced technology to provide customized offerings with appropriate premium. Today, chatbots are handling many customer service issues.


Though motor insurance segment continues to have the largest pie in the total industry premium. The growth rate has come down by 50% to just nine per cent. Stagnation in growth in sale of vehicles is one of the major reasons for this slump. The Indian auto sector faced trying times in FY 2018-19 as sales were halted due to weak customer sentiment led by a liquidity crunch, high vehicle prices due to change in insurance norms and uncertainty over then upcoming elections. The government cites increasing use of OLA, UBER and such taxi aggregators as one of the reasons for slump in the sale of two-wheelers and passenger cars. Growth in the miscellaneous insurance segment is largely driven by crop insurance with 83% share followed by credit guarantee with four per cent share and other miscellaneous insurance With 13% share. For 2018-19, Rs 20,747 crore was collected as premium under PMFBY and RWBCIS by all insurance companies across the country.

Miscellaneous segment (including crop and credit) recorded premium of Rs 34176 crore with growth of 11%.Growth in this segment was primarily led by crop insurance with 83% market share and 12% growth. Credit insurance segment had four per cent share with growth of three per cent while all other insurances under thus segment had 13% share with growth of seven per cent. As far as crop insurance is concerned, PMFBY is facing many challenges and hence following
changes have been proposed by the government:

  • Making crop insurance voluntary to all Borrower farmers where it was compulsory.
  • Removal of high premium crops.
  • Giving flexibility to States to provide customized add-on products.
  • Setting up State Level Corpus Fund.


The PSUs, including specialized insurers like AIC and ECGC, have registered a marginal growth of 0.3% compared to last year’s growth of 12.2%. The private players, including standalone health insurers have registered a significant growth of 26.1% in FY 2018-19 vis-å-vis 23.6% in FY 2017-18. The SHIS have registered growth of 37% while the private insurers (all lines) have registered growth of 25%. New India Assurance continues to be the industry leader with a market share of 14% and year-on-year growth of 5.25%. Amongst the private insurers, ICICI Lombard tops the table with 8.5% share and year-on-year growth of 17.25%. The technology driven new insurance companies like Go Digit and Acko have recorded remarkable growth. The private insurers have taken the sheen off the PSU insurers by crossing 50% mark. This has been facilitated by aggressive marketing and underwriting of the top private insurers. The PSU insurers have lost to their private counterparts in almost every segment except aviation, where market share remains status quo. The major loss has been in miscellaneous with nine per cent and motor with six per cent. Health Insurance with a market share of 27% is the fastest growing segment in Indian insurance market. It recorded year-on-year growth of 21% with a premium OR 45,489 crore in 2018-19. In FY 2018-19,the SHIS have recorded a growth of vis-å-vis in FY 2017-18 while the private insurers are closely following with a consistent growth of 35% over the last fiscal.

Commercial line of business comprising of fire, marine and engineering lines recorded total premium of Rs 17453 crore with a growth of 10%. The standalone fire segment recorded nine per cent growth, marine 12% and engineering 11%. Most insurance companies have incurred losses consistently in their fire portfolios. De-tariffication of premium rates in 2007 resulted in unhealthy competition with insurers offering high discounts to grab market share In some cases, standard fire cover was handed out free with premium charged only for add-on covers to grab business from other insurers. After de-tariffication discount driven regime spread across II years. GICRe has increased reinsurance premium payable by the direct insurers in eight industrial categories where claims have been high. This was based on analysis of burning cost ratio by Insurance Information Bureau (11B). Marine cargo registered a growth of 16% while marine hull segment registered eight per cent growth. As far as marine insurance segment is concerned, whist there are geographical differences, global cargo insurance market remains highly competitive with an abundance of capacity. Following 2017 NAT-CAT incidents, there has been firming of market condition for cargo accounts impacted by these events.


However, the growth of the PSU insurers has dipped to nine per cent in FY 2018-19 in FY2018-19. Major growth drivers for health insurance segments have been the government initiative, conducive regulatory regime, vibrant middle class, rise in number of lifestyle diseases, product Innovation – disease specific products ,need based add-ons etc, wellness initiative by Insurers, competitive pricing based on the behavioural pattern of the customers PSU insurers with market share of 45% have lost to their private counterparts who hold 55% market share in FY 2018-19. The overall growth during this fiscal was driven by the growth in motor, health and miscellaneous segments. The marine segment has registered significant growth primarily due to growth in marine hull insurance. Growth in the marine hull insurance was triggered by increase in premium rates in international market. Aviation line of business has registered an appreciable growth in FY 2018-19 owing to increase in the number of airline operators, increase in the strength of the fleet by a few operators and hardening of the rates across the globe due to major claims. Segment wise performance in 2018-19 clearly indicates the dominance of the private insurers across all the segments.

Motor segment continues to stand tall with market share of 44%, followed by Motor segment continues to stand tall with market share of 44%, followed by health (24%), miscellaneous (12%), Fire (nine per cent), Marine (four per cent), engineering and PA (three per cent) and liability (one per cent).

SWOT Analysis of Insurance Industry in India


  • Increase in FDI Limits.
  • Emerging young and middle-income group.
  • Regulator becoming a facilitator.
  • Increasing Digitalization.


  • Over-dependence on traditional distribution channels.
  • Increasing number of fraudulent claims.
  • Lack of adequate professional & trained personnel.


  • Shift from protection to prevention.
  • Tapping Tier II & Tier Ill Cities.
  • Increase in Disposable Income.
  • Increasing awareness due to mobile & media penetration.
  • Online services.


  • Increasing number of Catastrophic Events.
  • Increasing expectation of customers.
  • Lower Profit Margin.
  • Change in Government/Regulatory Policies


  • Government initiative.
  • Conducive regulatory regime.
  • Vibrant middle Class.
  • Rise in number of lifestyle diseases.
  • Product Innovation – disease specific products , need based add-ons etc.
  • Wellness initiative by Insurers.
  • Competitive pricing based on the behavioral.
  • Pattern of the customers.

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