New Delhi: According to a report by Benori Knowledge, the Indian life insurance industry has grown at a compound annual growth rate (CAGR) of 11% in terms of total premiums and 17% in terms of new business premiums during 2017-22.
The global provider of custom research and analytics solutions projected the industry to grow at a CAGR of 9% by 2027.
Benori Knowledge also found that the life insurance penetration rate in India increased to 3.2% in December 2021 from 2.8% in December 2019, which is comparable to the global average of 3.3%.
With a 3.2% penetration, India ranks 10th in the global life insurance market and is ahead of China (at 2.4%) and the UK (at 3%).
This is expected to grow in the coming years due to a number of factors, including achieving consumer sentiment and financial security, easing of regulation with regard to product approval and distribution, customization across products, balanced channel mix and digitization efforts at the company level .
“The volatility of the Covid-19 pandemic highlights the need for consumers to invest in products that will enhance financial security, one of them being life insurance,” Benori Knowledge said in the report.
To better understand consumer preferences towards life insurance, Benori conducted a snap poll to find out that 70% of respondents claimed financial security for the family by buying life insurance.
About 91% of the respondents said that their perception of life insurance has changed, from being viewed as an investment to being a security. In addition, 55% said that they purchased their policy through an insurance agent, while 23% bought it online, which includes direct purchases through bank portals, web aggregators and websites.
While the poll indicated the importance of agents, insurance agencies ranked second among distribution channels.
Bancassurance was the primary opportunity for consumers to find and buy life insurance, accounting for 55% of the distribution share in 2022. The breadth of bancassurance channel was attributed to consumer confidence and pre-existing relationships with banks as well as banking institutions. In-depth knowledge of the assets of our clients, enables them to provide products tailored to the needs of their clients.
The report also pointed out that the share of insurance agencies in the distribution mix is declining, from 30% in 2017 to 23% in 2022. The reduced growth in premium purchases through agencies is not driven by the bancassurance segment, but direct-to-consumer (D2C) channels.
Commenting on the findings of the report, Ashish Gupta, Co-Founder and CEO, Benori said, “The life insurance industry has been on an unprecedented journey over the past two years and has witnessed structural changes in the customer as well as the changing ecosystem. The assumptions have now created huge scope for insurance penetration.
Life insurance companies should work on leveraging advanced technology stacks such as AI/ML and customer segment analysis to derive actionable insights from customer behavior to provide a better suited, easy to understand product line. Investment in these technologies will also help in developing intelligent process automation that can significantly reduce underwriting errors. To achieve this, effective partnerships should be made with emerging fintech/insurtech companies.”
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