Powered by: Motilal Oswal
2024-11-15 12:09:53 pm | Source: IANS
India `s insurance sector growth surpasses China, Thailand: McKinsey

India’s insurance sector clocked a robust 11 per cent compound annual growth rate to cross the $130 billion mark during FY2020-23, surpassing Asian peers China and Thailand, which grew at less than 5 per cent, according to a McKinsey report. 

The report. titled 'Steering Indian Insurance from Growth to Value in the Upcoming Techade’, said that while the country's life insurance industry grew to $107 billion as of 2023, the general insurance industry touched $35.2 billion.

A growing middle class, greater awareness, rising healthcare costs, and supportive regulations have combined to offer high growth for India’s insurance industry over the last few years, the report added.

However, there is immense growth potential as a significant portion of the Indian population and insurable assets remain uninsured, increasing the risks of high out-of-pocket expenses, adding to the overall economic strain, and undermining the industry’s ability to bring full benefit to society.

Affordable private health insurance coverage could also reduce the strain on government healthcare, potentially freeing government funds to improve healthcare infrastructure, the report pointed out.

The McKinsey report also highlights that insurers’ ability to drive value has been impeded by challenges, including the inability to generate sufficient returns and manage operational efficiencies. Despite the regulator’s target of ‘Insurance for All by 2047,’ the industry’s penetration rate has slipped from 4.2 per cent in 2022 to 4 per cent in 2023, indicating that its progress has not been on par with India’s economic growth, the report added.

According to the McKinsey report, despite a decline in claims ratios, a steady increase in expense ratios among traditional players (until 2023) pushed the combined ratio upwards. “Improvement in leading productivity metrics, such as operating expenses per life or policy, has been negligible over the past two to three years for both life and general insurance companies,” it points out.

Peeyush Dalmia, Senior Partner, McKinsey & Company, said, “While current growth indicators are promising, the insurance industry has not seen improvement in productivity. Achieving long-term success requires a fundamental transformation in how insurance products are designed, distributed, and serviced.”

The industry stands at an inflection point, and Insurance companies that successfully implement these changes while ensuring focus on profitability will be well-positioned to capture the significant growth opportunities ahead, he added.

Disclaimer: The content of this article is for informational purposes only and should not be considered financial or investment advice. Investments in financial markets are subject to market risks, and past performance is not indicative of future results. Readers are strongly advised to consult a licensed financial expert or advisor for tailored advice before making any investment decisions. The data and information presented in this article may not be accurate, comprehensive, or up-to-date. Readers should not rely solely on the content of this article for any current or future financial references. To Read Complete Disclaimer Click Here
Latest News
Morning Market Outlook : Bank Nifty support is at 48...

India outlines 6-point plan to boost economic ties w...

MOSt Market Outlook : The market is expected to open...

Kazakhstan limits potato exports to control domestic...

Market is expected to open on a flattish note and li...

Maha Kumbh Mela 2025: Adani Group serves spiritual n...

Nifty has an immediate support at 23100 - Nirmal Ban...

Will continue to contribute towards PM Narendra Modi...

The daily price action formed a small bullish candle...

Daily Commodity Market Outlook 20.01.2025 by Mr. An...