India is currently the world’s tenth largest market in the insurance business and by the year 2032 it will become the sixth largest market.
Insurance Regulatory and Development Authority of India (IRDA) chief Debashish Panda said on Friday that the insurance industry would need Rs 50,000 crore of capital per year to double its reach in the next five years. Addressing a program of industry body CII, he said that business groups should think about investing in the insurance sector.
He said that the return on equity is 14 per cent in case of Life Insurance Companies and 16 per cent for General Insurance Companies. At the same time, the return on equity of the top five insurance companies is up to 20 percent.
According to the insurance regulator chief, the insurance sector is a highly competitive industry in which around two dozen life insurance companies and more than 30 general insurance companies are active. By the end of the financial year 2020-21, the total penetration of insurance was 4.2 percent. Panda, who heads the Insurance Regulatory and Development Authority of India, said, “If we have to double this reach, there is a need to infuse additional capital of Rs 50,000 crore every year.”
He said that the additional capital requirement has been estimated after analyzing the current growth rate of gross domestic product (GDP), inflation and access. He said that after March he will discuss this with the heads of insurance companies. Panda said, “I would like to reach out to the companies present in this country and the investors who want to invest their money.”
He said that the target is to double the reach of insurance in the next five years. Stating that it is possible to insure everyone till the completion of 100 years of independence i.e. By the year 2047, he said that for this gradual development will have to continue. India is currently the world’s tenth largest market in the insurance business and will be the sixth largest by the year 2032.
The IRDA chief said, ‘We have to take a fresh look at the way insurance is distributed.’ He has also asked the insurers to focus on adapting to the changing needs of the people.
