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Insurance Industry in India – An Overview

Introduction It’s now been more than a decade since the opening up of the insurance sector in India to the private sector and for foreign players.

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Last Updated - May 4, 2023
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It’s now been more than a decade since the opening up of the insurance sector in India to the private sector and for foreign players. The past decade has seen considerable growth in the insurance sector and has seen the introduction of a large number of innovative products – a natural and positive outcome of increasing competition. The insurance sector plays a very crucial role in the economy of any country – it increases avenues for savings of individuals, protects the future of individuals and spreads risks of institutions by forming a large pool of fund. The sector also contributes significantly to the capital markets and assists in large capital infrastructure developments of our country through their funds.  

The insurance industry in India is divided into 2 basic sectors – Life Insurance and Non-life Insurance (also called General Insurance and even called Property and Casualty or P&C ). Both these sectors are governed by Insurance Regulatory and Development Authority (IRDA) of India which is a government body which frames the rules for the entire industry and all insurance companies have to abide by them. IRDA is the policy maker for the entire insurance industry in India and also serves as the custodian of consumers rights.

As the name suggests life insurance companies cover the risks associated with the life of a person and non-life insurance companies cover other risks associated with our daily living like health, our vehicles, travel and home insurance to name a few. Non-life insurance sector also covers a lot of other risks in the corporate world – from simple office insurance to insuring entire factories and industrial equipments. Over a period of time life insurance policies have started incorporating an investment component along with the basic insurance cover so that your money grows while it remains invested with the insurance companies – details about these types of policies will be taken up in detail in the forthcoming posts in this series. But non-life insurance companies have so far been restricted to pure risk cover itself.

History of insurance in India

There is a lot that can be written on the history of insurance in India, but it would take up a lot of your time and make this a long article. Those interested may read it by clicking here. To put it in short, the insurance sector had only government owned entities till a decade back. LIC (Life Insurance Corporation of India) was the only life insurance provider. In the general insurance space there were players like National Insurance, New India Assurance, Oriental Insurance and United India Insurance which offered solutions. All this changed in the year 2000 when private players were allowed to start operations. A host of private players entered this market and have been aggressive ever since. As of now we have 23 life insurance companies and 24 general insurance companies. There are a number of new players who are awaiting regulatory clearances and approvals to start their business in India in both the life and general insurance sectors.

Current market Scenario

LIC is by far the biggest life insurance company in India both in terms of market share and their presence in India – it is the only government owned entity. Most of the private players, in both life and non-life sectors, have started business in India with the partnership of established insurance players in the world. The expertise of these global players help the Indian insurance company’s perform much better as they can replicate the learning gained from other markets over a large period of time. The foreign partner in any insurance company in India is not allowed to own more than 26% of the shares in Indian insurance company as per IRDA regulations. We have seen big financial groups in India like SBI, ICICI and HDFC enter this pace and become aggressive players. Other famous corporate groups like the Tatas, Birlas and the Ambanis have also formed insurance companies.

List of Life Insurance Companies

While LIC has been around for a long time and is an extremely profit making venture, some of the private players have just about started making profits on a year-on-year basis. It will take some time before most of them break even. The life insurance business has a long gestation period and it may take more than a decade to break even – so all players would be ready for the same.

Aegon ReligarePrivate Player
Aviva IndiaPrivate Player
Bajaj Allianz Life InsurancePrivate Player
Bharti Axa Life InsurancePrivate Player
Birla Sun LifePrivate Player
Canara HSBCPrivate Player
DLF PramericaPrivate Player
Future Generali LifePrivate Player
HDFC StandardPrivate Player
ICICI PrudentialPrivate Player
IDBI FortisPrivate Player
IndiaFirstPrivate Player
ING VysyaPrivate Player
Kotak Mahindra Old MutualPrivate Player
LICGovernment Owned
Max New YorkPrivate Player
Met LifePrivate Player
Reliance Life InsurancePrivate Player
Sahara IndiaPrivate Player
SBI LifePrivate Player
Shriram Life InsurancePrivate Player
Star Union Dai-ichiPrivate Player
Tata AIG Life InsurancePrivate Player

List of Non-Life Insurance Companies

The core business of almost all non-life insurance companies in India are loss making. It is only through investment income that these companies report profits. This is not a desirable scenario and we should see a lot of upward price revisions in the coming years – some this has already started. With an entry of every new player we see a effort to grab market share and drop premiums. This has been the status of the general insurance companies for quite a few years and as a result the premium collected are not proportionate to the risks and claims are either greater than the premium collected or very close to it. Gradually, we are witnessing some companies taking steps to correct this anomaly.

Agriculture Insurance CompanyGovernment Owned
Apollo Munich Health InsurancePrivate Player
Bajaj Allianz General InsurancePrivate Player
Bharti AXA General InsurancePrivate Player
Cholamandalam MSPrivate Player
Export Credit Guarantee CorpGovernment Owned
Future GeneraliPrivate Player
HDFC ErgoPrivate Player
ICICI LombardPrivate Player
Iffco TokioPrivate Player
L&T General InsurancePrivate Player
Max BupaPrivate Player
National InsuranceGovernment Owned
New India AssuranceGovernment Owned
Oriental InsuranceGovernment Owned
Raheja QBEPrivate Player
Reliance General InsurancePrivate Player
Royal SundaramPrivate Player
SBI General InsurancePrivate Player
Shriram General InsurancePrivate Player
Star Health InsurancePrivate Player
Tata AIG General InsurancePrivate Player
United IndiaGovernment Owned
Universal SompoPrivate Player
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Author

Deepak Yohannan is the Founder & CEO of MyInsuranceClub. He enjoys writing on Personal Finance and focusses on explaining the basic concepts of insurance in simple language.