1. The global insurance market is experiencing a transformation to ‘digital-first’ business models that can unlock new value worth billions of dollars
2. With an increasing focus on personalized premiums and usage-based coverage, insurers are leveraging Internet of Things, advanced analytics and machine learning to develop more granular individual risk profiles
3. Collaboration between traditional insurance and InsurTech firms will give rise to newer models and revenue streams, higher profitability and reduced operational costs

The insurance sector is made up of companies that offer risk management in the form of insurance contracts. The insurance industry is getting set for the next round of growth after a long spell of volatile economic conditions.

The basic concept of insurance is that one party, the insurer, will guarantee payment for an uncertain future event. Meanwhile, another party, the insured or the policyholder, pays a smaller premium to the insurer in exchange for that protection on that uncertain future occurrence.

Insurers are regularly introducing newer products which increasing demand for organizations to establish independent functions to support key system initiatives like:

1. Enhancement / modernization of existing core systems (sales and distribution, policy administration, claims management, underwriting)
2. New digital ventures to reach out to an upwardly online / mobile demographic
3. Introduction of newer integration standards aided by technology adoption (legacy modernization, SOA / web services, etc.) to aid effective consolidation
4. Streamlining core business processes (policy administration and claims processing) and automation in new business, policy issuance and claims for faster time to market with new product rollouts

In India, the insurance industry consists of 57 insurance companies of which 24 are in life insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims.

References: Media Reports, Press Releases, Press Information Bureau, Union Budget 2017-18, Insurance Regulatory and Development Authority of India (IRDA), Crisil

Market Size

Government's policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation of insurance schemes. Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance. Overall insurance penetration (premiums as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001. In FY19 (up to October 2018), premium from new life insurance business increased 3.66 per cent year-on-year to Rs 1.09 trillion (US$ 15.46 billion). In FY19 (up to October 2018), gross direct premiums of non-life insurers reached Rs 962.05 billion (US$ 13.71 billion), showing a year-on-year growth rate of 12.40 per cent.

Future

The future looks promising for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. The overall insurance industry is expected to reach US$ 280 billion by 2020. Life insurance industry in the country is expected grow by 12-15 per cent annually for the next three to five years.