Posted on Mar 30, 2010 by Sergio Ulloa
Citing the massive increase in awareness to insure themselves against possible causalities, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected that premium from General Insurance will rise to levels of close to US$22.2 billion (EUR 16.4 billion) in the next 5 years.
A recently released assessment by ASSOCHAM estimates the current insurance premium collection to be close to US$77.8 million (EUR 57.6 million), with a high likelihood in future that it will gain a speedier pace.
The year-on-year annual growth of general insurance premiums between 2000 and 2009 is estimated to have been in excess of 15%. The gross premiums of general insurance in 2000 were estimated to have reached almost US$22.2 million (EUR 16.4 million). This amount by 2009 is estimated to have climbed to close to US$77.8 million (EUR 57.6 million) due to increased penetration levels, particularly in large towns, metropolitan areas and other cities.
According to ASSOCHAM, over 60% of the population in India, largely in the rural parts of the country has yet to be tapped by the insurance industry. The social schemes of the government are having the effect of raising levels of awareness and improving the income among a large chunk of the rural population, and this is believed to become one of the driving factors for the growth of insurance premiums up to the projected level of US$22.2 billion (EUR 16.4 billion) by 2015.
The automotive sector is experiencing high growth, together with great improvements in healthcare, both of which factors will substantially open up the potential of health insurance as well.
The market size of general insurance in the United States is currently worth US$488 billion (EUR 361.5 billion), compared to US$10.5 billion (EUR 7.8 billion) of Switzerland, US$74 billion (EUR 54.8 billion) of France, US$77 billion (EUR 57 billion) of Germany, US$70 billion (EUR 51.9 billion) of Japan, US$14.2 billion (EUR 10.5 billion) of Brazil, US$14.1 billion (EUR 10.4 billion) of Russia, US$2.6 billion (EUR 1.9 billion) of Thailand, and US$26.3 billion (EUR 19.5 billion) of China. As per latest estimate, the size of this market in India is US$6.2 billion (EUR 4.6 billion).
The penetration level of general insurance in India is estimated to be 0.60% of its GDP, which compares to a world average of 2.14%. In the United States it is 3.94% of its GDP. While in Switzerland, France, Germany, Japan, Brazil, Russia, Thailand and China, this percentage in relation to their GDP amounts to 2.4%, 2.34%, 1.99%, 1.46%, 1.10%, 1.10%, 1.08%, and 0.81 respectively. India ranks 136th in penetration levels worldwide, compared to rankings 106 of China, 87 of Thailand, 86 of Russia, 85 of Brazil, 61 of Japan, 36 of Germany, 25 of France, 20 of Switzerland and 9 of The United States of America.
The great potential for growth in general insurance premiums in India lays in its rural sector, in which a large number of micro financing institutions will explore possibilities for wider coverage of general insurance, together with the government initiatives on mass insurance, which will also be gradually widen to cover large portions of the countryside for general insurance, including the urban pockets in India.
In a more distant future, non-banking financial companies will also be tied up with the entire banking infrastructure to better utilise the distribution of insurance products.