Insurance by name means insuring against any unseen contingencies. In today’s world insurance is mainly, a guarantee given by various insurance companies to compensate against various unseen losses and damages in future in return for a payment called premium.
But in India, Insurance is still seen as an expense and not an investment. Reason being outflow of money. But we fail to understand, that it covers the uncertainties, which might land us up in deep trouble.
Currently Insurance companies are moving forward as awareness among the population is increasing about various investment avenues and advantages of insurance. Indian in total has 57 insurance companies, which include 24 life insurance companies and 33 being non life insurance companies. Life Insurance Corporation of India is one of the key only public sector companies catering to life insurance sector. Out of 33 general insurance companies, five private sector insurers are registered to underwrite policies exclusively in health, personal accident and travel insurance segments.
Penetration of insurance has been pushed by government’s programmes and policies like, Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Suraksha Bima Yojana etc.
Looking at the growth story, Insurance sector grew at a rate of 17.65% on YoY basis generating total revenue of Rs1.65 trillion for the year 2017-18.With this pace overall industry is expected to grow to $280billion by 2020.
There is no looking back for the industry, as total premium receipt has been growing at a compounded annual growth rate of 11.48%.
Life insurance companies’ premium receipt amounted to Rs$25.12 billion and is expected to reach $25.44billion in current FY of 2018-19 and it grew at a compounded annual growth rate of 13.28% in oast 15 years i.e. from Fy02-Fy2017.Life insurance has the potential to grow by2-2.5 times from its current level, till2020.With different programmes launched by government of India, has helped Life insurance penetration reached to 2.27%
Looking at the growth prospect, private sector players also have increased their activity and the market share of the private player has increased from mere 2% in the year 2003-04, to 28.93% for the FY2017.Despite private sector increasing share, LIC still remain dominant player in the life insurance with market share of 71.07%.
With life insurance sector, general insurance sector or say non life insurance sector is also taking pace and has grown with a CAGR of 11.05% and is currently valued at US$ 19.8 billion from valuation of US$ 2.6 billion in FY02.Motor insurance has lead in general insurance sector.
With such high growth rate, Insurance sector is expected to be one major contributor of the economy. In the next series of insurance sector, we’ll understand, “why insurance is not a waste of money.”