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ICICI Lombard Expert Blog
 

Insurance Industry to Witness Rapid Growth, Say Experts

February 18 2017
Insurance Industry

The insurance industry is seeing good times and more of it is still to come. At the recently concluded Business Standard Insurance Roundtable, the outlook among industry experts – which included Bhargav Dasgupta, MD and CEO of ICICI Lombard General Insurance - regarding the future was filled with optimism. All of them predicted that the insurance industry was going to witness even more growth in the coming years.

The insurance sector is growing at an amazing rate of 30% annually, with one of the biggest drivers coming in the form of crop insurance. The overall premium collected has crossed the 1 lakh crore mark and with the push on crop insurance, this figure is likely to exceed ₹1.80 lakh crore in the near future. ICICI’s Bhargav Dasgupta says, “Crop insurance was part of our miscellaneous segment. Today, crop insurance is the largest, after motor and health.”

The government is also doing all it can to promote crop insurance, and is targeting to improve the coverage from the present 22% to 50% within the next couple of years. One expert believes that if the coverage expands to the targeted level, then the industry is sure to grow at more than 30% for the next three years. He also adds that crop insurance, can to a great extent, alleviate the sufferings of farmers thereby reducing the number of farmer suicides.

Discussing the impact of demonetisation, experts believed that it had a positive impact on all the sectors. Though there weren’t any concrete statistics to prove it, they believed, that the sudden increase in demand across all industries wasn’t possible without demonetisation, as there were no other external factors to explain the phenomena. One plausible explanation for the increase was that all the savings were moving from informal into formal channels thus creating more demand.

Addressing the concern that the insurance industry had not quite moved with the times as far as digitalisation was concerned, most experts commented that it was too early for that. They said that insurance was something that buyers need a second opinion about. A policy is usually taken up after doing a lot of online research, but eventually customers prefer getting a “feel of the product” before giving the final go-ahead, said one of the panelists. Furthering their case, they said that even in developed markets digitalisation was not prevalent as a lot of verification needed to be done before selling the product.

The boom in insurance has led to the entry of many new players, leaving most experts feeling that the industry is getting crowded. With as many as 15 companies having less than 2% market share, some of them feel consolidation is also in the pipeline. However, some experts who are looking at the tremendous natural growth on offer, feel that consolidation is a distraction from what is ripe and waiting to be reaped.

Also Read:

₹894 Crore Released as Insurance to Farmers in Maharashtra
Health Insurance Sees Dramatic Increase in Last Decade

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