NEW DELHI New Delhi: According to a McKinsey report, India's insurance sector has crossed the $130 billion mark with a compound annual growth rate of 11 per cent during FY 2020-23, ahead of Asian counterparts China and Thailand. The report titled 'Steering Indian Insurance from Growth to Value in the Upcoming TechEd' states that the country's life insurance industry is expected to grow to $107 billion by 2023, while The general insurance industry reached $35.2 billion.
The report said that a growing middle class, greater awareness, rising healthcare costs and supportive regulation have combined to offer high growth for India's insurance industry over the past few years. However, there is immense growth potential as the Indian population And a large portion of insurable assets are still uninsured, increasing the risk of higher out-of-pocket expenses, increasing overall economic stress and reducing the industry's ability to deliver full benefits to society.
The report notes that affordable private health insurance coverage could also reduce pressure on government healthcare, potentially freeing up government funds to improve healthcare infrastructure. The McKinsey report also notes that insurers' ability to drive value has been hampered by challenges, including an inability to generate adequate returns and manage operational efficiencies. The report said that despite the regulator's target of 'insurance for all by 2047', the industry's penetration rate has declined from 4.2 per cent in 2022 to 4 per cent in 2023, indicating that its progress will lag behind India's economic growth. Has not been equal.
According to the McKinsey report, despite a decline in claims ratio, a steady increase in expense ratio among traditional players (through 2023) pushed the combined ratio upward. It noted that “improvement in key productivity metrics such as operating expenses per life or policy has been negligible over the last two to three years for both life and general insurance companies.” Piyush Dalmia, Senior Partner, McKinsey & Company, said, “While current growth indicators are promising, the insurance industry has not seen an improvement in productivity. A fundamental change in the way insurance products are designed, delivered and serviced is needed to achieve long-term success. is required.” He said the industry is at a critical juncture, and insurance companies that successfully implement these changes while focusing on profitability will be well-positioned to capture significant growth opportunities ahead.
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