India insured by 2047: Insurance companies must be profitable to achieve this
In synchrony with the broader national intent of India becoming a developed nation, the Insurance Regulatory and Development Authority of India (IRDA) has embraced the laudable goal of “India Insured by 2047." The objective is to ensure that “every citizen has appropriate life, health and property cover and every enterprise is supported by an appropriate solution" and to make India’s insurance sector “globally competitive," as elaborated in a press release. Enthusiasm within the IRDA is palpable. Coordinated attempts are afoot to usher in regulatory changes and push insurance companies to reach out wider, especially to the rural uninsured, and diversify their product baskets to make insurance more accessible, affordable and relatable.
Meeting such ambitious aspirations would warrant building capacity, elevating competencies and ushering in creativity. The government think-tank Niti Aayog projects India’s GDP at about $30 trillion in 2047. The global average premium (on both life and non-life policies) as a proportion of GDP, a measure of the concept’s penetration, is 6.8%.
This would translate into an Indian insurance industry worth $2.04 trillion in annual premium payments in 2047. If we attain the penetration level of South Korea (11.1%) or Taiwan (11.4%), the market’s size would be larger. India’s insurance penetration was at 4.1% in 2023 and the industry was placed at $92 billion.
To reach $2.04 trillion in 23 years would require a compounded annual growth rate (CAGR) of 14.2%. Can it be achieved? Near stagnant penetration even after this sector’s liberalization more than two decades ago does not inspire confidence. The edifice of the insurance industry stands on three pillars: Insurance companies, distribution
. Read more on livemint.com
