InvestorQ : Is it true that India is poised to become the sixth largest insurance market in the world?
Aditi Sharma made post

Is it true that India is poised to become the sixth largest insurance market in the world?

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Mahima Roy answered.
1 month ago
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According to a recent reported prepared by Swiss Re, India is poised to become the 6th largest insurance market in the world by 2032. Currently, it stands at tenth position. It is already the second largest insurance market among the emerging markets. Currently, India has an estimated global market share of 1.9% premium volumes. Swiss Re estimates that premiums will grow by an average of 9% per annum in real terms (net of inflation) between 2023 and 2032. That is 150 bps higher than the CAGR growth of the last six years.

If it works out that way, then India would be the 6th largest insurance market in the world by 2032, and it would be larger than Germany, Canada, Italy and South Korea. How are these projections made? They are based on expectations of strong economic growth, rising levels of disposable income, a young and tech savvy population, improved risk awareness and better digital penetration. Already, the consciousness about insurance has increased substantially in the aftermath of the pandemic in India.

Swiss Re has also made these estimates based on the existing penetration of insurance as compared to global benchmarks. Currently, the penetration of non-life insurance in India at just 1% is significantly below the global average of 3.9%. Growth in non-life sector is likely to be driven by demand for health covers, as people become more conscious about the importance of insurance amidst rising medical bills. As auto ownership expands, auto insurance is also likely to be a major part of the insurance basket.

The numbers are a lot more flattering on the life insurance front. With life insurance penetration of 3.2%, it is nearly twice the emerging market average and slightly above the global average. The problem is in the extent of the cover. Most life insurance products sold in India are savings-linked endowments. Hence there is a huge financing gap that Indian families are exposed to on the life cover front. India’s life cover shortfall (mortality protection gap) stands at $17 trillion, which is ridiculously high.

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