Swiss Re sees life risk business boom in India

The life insurance business in India is expected to grow by leaps and bounds and jump by more than 300 per cent while non-life insurance premium is expected to more than double in the next 10 years.

According to Swiss Re's vision for India, by 2013 life insurance premiums ought to cross Rs 200,000 crore and non-life insurance premium to Rs 42,500 crore.

Asia is seen as the major growth markets for the insurance sector with India and China being the leading markets, followed by South Korea and Taiwan.

"The industry will grow above the gross domestic product (GDP), with life insurance business continuing to benefit from increasing affluence and higher risk awareness as well as development of bancassurance," said Swiss Re chief economist Asia Pacific Clarence Wong.

He was in Mumbai today to deliver the key address at Swiss Re's discussion on 'Global Insurance Review 2003 and Outlook for 2004'.

Speaking to Business Standard, Wong said that with GDP per capita touching $ 1,090 in China and India approaching this level, greater spend on pension and medical cover will see rise in life insurance premiums. He estimates 11 per cent growth in 2004 for the Asian life insurance business.

"Non-life insurance penetration in India will double to more than one per cent from 0.6 per cent today, while life insurance penetration is projected to touch 4.5 per cent in 2013 from the current two per cent plus," said Swiss Re head of India, Turkey & the Middle East, Davinder Rajpal.

"The outlook right now is very good. In the US, industrial production continues to rise, consumer spending is strengthening and the investment climate is improving," said Wong.

The US recovery is expected to boost growth worldwide. Europe is getting stronger and Japan is growing modestly while the rest of Asia continues to expand rapidly.

Swiss Re is very bullish on the global insurance industry for 2004, but calls for the insurance regulator to allow foreign reinsurance branches in India.

"With the exception of India, everywhere in the Asian region including China where Swiss Re has operations, we have been given a branch licence. This helps the individual markets gain benefit from our global balance sheet. In India, unfortunately, we are allowed to operate only as a service company," said Rajpal.

This makes it impossible for local insurers to access reinsurer's global balance sheet, or enable the regulator's direct supervision of reinsurance branches, he added.