India’s Life insurance Industry Set to Grow at 10% CAGR to INR13.5tn by 2028: GlobalData

India’s Life insurance industry is poised for significant growth in the coming years, with forecasts indicating a compound annual growth rate (CAGR) of 10% to reach INR13.5tn ($216.1bn) in 2028 from INR9.3tn in 2024 in terms of gross written premiums (GWP). This positive outlook is backed by insights from GlobalData, a leading data and analytics company.

After a slight slowdown in 2023, the Indian Life insurance sector is expected to regain momentum in 2024, driven by the rising demand for traditional Life insurance policies. Additionally, new regulations focusing on inclusivity and advancements in InsurTech are set to pave the way for the introduction of innovative products and the expansion of insurance coverage, further fueling industry growth.

Ms Aarti Sharma, an insurance analyst at GlobalData, highlighted the impact of inflation and interest rates on the industry. With inflation persisting above the 4% target and a key policy rate of 6.5%, the high-interest rate environment is expected to remain stable in 2024. This environment, coupled with a positive economic outlook, is anticipated to drive the introduction of new products and boost demand for non-linked Life insurance policies.

Non-linked insurance policies are projected to dominate the market, accounting for an 87.5% share of total Life insurance GWP in 2024. The prevailing high-interest rates are expected to benefit insurers and policyholders alike, leading to better investment outcomes. Non-linked insurance policies are forecasted to achieve a CAGR of 10.4% over the period of 2024-2028.

The International Monetary Fund has revised India’s GDP growth projection, forecasting a growth rate of 6.8% in 2024 and 6.5% in 2025. This positive economic outlook is supported by robust domestic demand and a growing working-age population, which bodes well for the Life insurance industry’s expansion.

Ms Sharma also emphasized the importance of enhancing insurance access in rural and underserved areas to increase insurance penetration. The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines to expand insurance coverage in rural areas, effective from April 1, 2024. Insurers are mandated to insure a specified number of lives across gram panchayats under individual or group policies, with a target of covering at least 10% of lives across 25,000 gram panchayats in the first year.

In addition to regulatory initiatives, InsurTech developments and digitalization are expected to play a crucial role in driving Life insurance growth. The approval of Bima Sugam, a digital insurance marketplace, in March 2024 is anticipated to revolutionize the Indian insurance industry. This platform will serve as a comprehensive solution for insurers, intermediaries, and customers, facilitating the comparison of Life insurance products, competitive pricing, and the launch of affordable and customized insurance policies.

Insurers are also leveraging technology to enhance customer service through mobile apps, chatbots, and advanced technologies like AI, blockchain, and machine learning. AI-powered chatbots and virtual assistants engage with customers in real-time, providing information on insurance products, assisting in the purchase process, and improving overall customer experience.

Overall, the Indian Life insurance industry is on a growth trajectory, supported by regulatory reforms, technological advancements, and a favorable economic environment. With a focus on inclusivity, innovation, and digitalization, the sector is well-positioned to capitalize on emerging opportunities and meet the evolving needs of consumers in the years ahead.