Life insurance remains a sunrise sector in India, characterised by low penetration, a large protection and pension gap, and massive growth opportunities in the coming decade. This was the consensus view of the Life Insurance CEO panel at the recent Business Standard BFSI Insight Summit.
This sentiment aligns with the Insurance Regulatory and Development Authority of India’s (Irdai’s) goal of achieving 100% insurance coverage in the country by 2047, setting the life insurance industry on a path of rapid growth.
“The industry is ready to meet the Irdai challenge of providing insurance to all by 2047. Numerous regulatory reforms have been implemented, and companies have initiated efforts to address three key issues: availability, affordability, and accessibility, which have previously hindered growth. The industry’s primary focus is to offer insurance to every insurable individual in the country,” said Mr R Doraiswamy, Managing Director, Life Insurance Corporation of India.
“Life insurance is highly underpenetrated in the country compared to other banking, financial services and insurance products, such as banking or mutual funds (MFs). India’s protection gap is substantial, standing at around 83%, with an estimated underprotection of life worth approximately $16.5 trillion. Moreover, only a fraction of Indians have pension coverage, resulting in a total pension gap estimated to reach INR55 trillion by 2050. These factors present huge growth opportunities for us in the coming decade,” said Mr Mahesh Balasubramanian, MD of Kotak Mahindra Life Insurance Company.
“The sum assured to gross domestic product ratio in India is one of the lowest in the world at around 25%, in contrast to upwards of 100% in most comparable markets. With the current regulatory support and encouragement from authorities to accelerate growth and increase penetration, the life insurance industry is poised for take-off,” said Mr Naveen Tahilyani, MD and chief executive officer (CEO) of Tata AIA Life Insurance Company.
Mr Anup Bagchi, MD and CEO of ICICI Prudential Life Insurance, said, “The industry addresses critical societal needs, which include life protection and credit protection. It also provides investment and retirement solutions to individuals and their families. Currently, there is no substitute product available in any other industry. As per capita income in India increases, and various demographic segments emerge, the need for life insurance products and various forms of protection that we provide will become even more evident.”
Ms Vibha Padalkar, MD and CEO of HDFC Life Insurance Company, stressed that the life insurance industry should focus on increasing penetration, especially in rural areas and among women. “Life insurance penetration in rural areas, currently at around 5%, is one-sixth of that in urban India, where penetration stands at around 30%. Additionally, only 9% of women are covered, compared to 18% of men. This represents a substantial growth opportunity for the industry.”
The CEOs also advocated that the life insurance industry should draw inspiration from the MF industry in terms of marketing and diversifying its product offerings to enhance penetration.
In addition, the industry leaders supported the idea of allowing life insurance companies to offer health insurance products.