-- Life Insurance Industry to have close to 5 lakh employees by 2020
Life Insurance Council, the industry body of life insurers in India, has estimated life insurance industry to record a CAGR of 12-15% over the next 5 years. This growth expectation is based on multiple regulatory and industry changes brought over in the past few years as well as the favourable demographics of the country.
Favourable Indian demography – insurable population, expected to grow to 75 crore and life expectancy to 74 years by FY 2020, would help achieve spurt in the preference for Life Insurance. Thus, Life Insurance, which is the second most preferred financial instrument, would drive the growth in Net Household Financial Savings to an estimated 35% of Total Savings in the next seven years, as compared to meager 26% in FY10.
The Life Insurance industry is expected to record a CAGR of 12-15% over the next five years and the Life Insurance Penetration measured as the percentage of Insurance Premium to gross domestic product (GDP) is expected to grow to 5% by year 2020 from current 3.2%.
“The worst is over for the Life Insurance industry that has not seen very positive growth figures in the past few years. With favourable demographics, new products launches on the anvil, industry expanding their operations and infusing efficiencies the industry will see significant growth in India,” said Mr. V Manickam, Secretary General, Life Insurance Council.
Life Insurance Council also estimated a potential foreign exchange inflow of US$10 billion in the near term, when the FDI in Insurance increases to 49%, as proposed by Central Government. The increase in the permissible limit would bring in stable capital inflows and help the industry mature faster.
Life Insurance industry stands to immensely benefit, with increasing distribution landscape especially in semi-urban and rural areas with the accessibility to Common Service Centres, considered as the cornerstone of National e-governance plan. Currently, there are around one lakh CSCs, each of which serves a cluster of 6-7 villages, thereby covering close to 6.5 lakh villages across India. IRDA has already issued guidelines to facilitate tie-up with CSCs and individual life insurance companies are in the process of sewing tie-ups with CSCs. The move will help Insurance Companies to open more outlets/offices in rural areas.
Recently, IRDA has granted license to five Repositories that are authorized to open e-Insurance Accounts. These accounts will help safeguard policyholders to hold insurance policy documents in electronic format and also provide access to the insurance portfolio online.
Life Insurers also plan to expand their distribution channel and increase the number of Life Insurance Advisors to more than 30 lakhs over next five years and is expected to contribute INR 3,50,000 crores towards the Infrastructure projects by FY 2020.
The Life Insurance industry has witnessed spectacular growth in AUMs, with investments that have been targeted towards deployment of funds enabling infrastructure growth in the country. The AUMs of Life Insurers has risen to INR 17,41,175 crore as on March 31, 2013 as compared to INR 1,94,010 crore in 2000-01, a phenomenal growth of around 900%.
The total benefits paid to customers by Indian Life Insurance industry in most challenging period, has increased to INR 1,91,336 crore as March 31, 2013 as compared to INR 1,41, 806 crore as on March 2011. In addition, there has been a marked improvement in death claims settled by Life Insurers in terms of number of policies as also by amount and the time taken to settle death claims.
