The insurance industry in the country is set in the growth trajectory and is expected to grow significantly in the coming years due to rising financial literacy, according to a recent report.
"The Indian insurance sector is set to mark a significant growth in the coming years. The lower level of penetration, favourable demography, initiatives like 'Pradhan Mantri Jan-Dhan Yojana' for enhancing financial inclusion, rising financial literacy along with increase in domestic savings consequent to rise in per capita income are expected to support the growth of insurance sector going forward," said a report by Dun and Bradstreet.
The report 'Insurance-Sectoral Outlook 2017' said with liberalisation of Foreign Direct Investment norms for the sector, many foreign insurance firms have entered into India to explore the untapped potential of this industry.
The favourable regulatory environment in the country is also expected to help in fuelling growth of the insurance sector, it added.
To provide insurance cover mainly to the below poverty line (BPL) households, the government has introduced some insurance schemes such as 'Rashtriya Swasthya Bima Yojana' (RSBY), 'Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY), it said.
These schemes are expected to help in penetration of insurance sector in lower and lower-middle income population, which currently does not possess insurance cover, it added.
The report revealed that the insurance sector is expected to witness surge in the flow of foreign capital in the coming years given the relaxation of FDI norms.
In 2016, the domestic insurance industry witnessed few major announcements related to investment as well as entry of new players which is expected to accelerate growth of the sector going forward.
UK-based reinsurance company Lloyd is expected to set up its branch in Mumbai in 2017, it said.
In addition to this, US-based Reinsurance Group of America Incorporated, Germany-based reinsurance companies, Hannover Re and Munich Re, Switzerland-based Swiss Re and French reinsurer SCOR SE also received approval from the IRDA to establish their branches in India.
With more companies entering the sector, competition as well as operational efficiency is expected to rise, which would raise the penetration in the country, the report said.
The report also said going forward, innovations in the
insurance sector is expected to increase penetration level.
The introduction of point of sale (PoS) transactions for products like cattle or livestock insurance, agricultural pump sets insurance, fire insurance, crop insurance and government insurance schemes has helped to simplify the distribution network in small cities and villages, it noted.
A range of insurance products under life and non-life insurance segments are expected to be sold through PoS persons, in turn improving insurance penetration, said the report
In the coming years, initiatives like extension of insurance portability facility to other insurance products, differentiated pricing on e-policies, customised health insurance policies among others are expected to fuel growth of the sector, it added.