The strong underlying demand is likely to push premium income of the Indian insurance industry to Rs 18 lakh crore by 2020, the apex chamber ASSOCHAM said.
The country will continue to be one of the fastest growing life insurance markets with annual gross written premiums of Rs 2.68 lakh crore set to grow by 13 to 14 per cent and reach Rs 5.17 lakh crore by 2015.
The life insurance industry grew by 28 per cent during 2000 and 2010 in new business premiums, 27 per cent in annualised premium equivalent (APE) and 25 per cent in gross written premiums, catapulting India to top ten markets globally.
The relentless focus on growing new business premiums has led to several inefficiencies in business practices. Creation of short-term products, incentivisation of front-line managers and agents primarily on new business and limited profiling of customer needs resulted in low levels of profitability.
Between September 2010 and March this year, the industry registered negative growth of 13 per cent in APE. In the private sector, the negative growth was even higher at 32 per cent. In the first quarter of 2011-12, the slowdown continued with the industry registering negative APE growth of 23 per cent and private sector registering negative APE growth of close to 40 per cent.
Going forward, the focus of industry will broaden beyond growth to include two important aspects which has been largely ignored in the past providing long-term savings and protection to consumers, and driving profitability in the core life insurance business through sustainable business models.
The market is likely to witness continued regulatory action in line with trends which are being seen among regulators across the world. Secondly, the Indian consumer is evolving rapidly.