India’s ranking in world insurance markets have dropped four notches in 2011 to number 15 from number 11 in 2010. India’s share of the world insurance markets has declined to 1.58% in 2011 from 1.8% in 2010.
India has been displaced by countries like Brazil, Taiwan and Spain which now rank higher than India.
This decline can be attributed to sharp drop in life insurance business in 2011-12.
India’s best performance was in 2009, when surge in premium generated by life insurers through Unit-Linked Insurance Plan (ULIPs) resulted in India’s ranking rising to number 9 position, displacing Taiwan.
When Indian life insurance industry was opened to private players in 2000, it ranked number 20 and accounted for mere 0.5% of world premium.
By 2009 India’s share in world premium improved to 2.45%, overtaking developed markets of west such as Spain, Netherlands, Switzerland, Sweden, Belgium, Ireland and Finland, South Africa, Australia and Canada .
However, now some experts say that surge in premium in 2009 can not be taken as increase in penetration of life insurance as it was investment driven with ULIPs marketed as a channel to invest in equity markets.
In last two years IRDA came out with guidelines that required life insurers to reduce charges and provide minimum insurance cover with every policy. This resulted in sharp drop in premium collection even though sum assured has jumped because of the change in focus to term insurance plans.
According to a report by Swiss Re, in 2011 total insurance premium in emerging markets grew only 1.3% to $700 billion, largely due to the poor performance of the two biggest emerging markets –China and India.
Premiums in India and China which account for over 42% of total emerging markets premium volumes, declined 5.5% and 6.4% respectively. However, two other BRIC countries – Brazil and Russia’s growth remained solid, keeping the emerging market’s share of global premiums at 15%.
Together BRIC countries continue to dominate insurance growth in emerging markets accounting for about 60% of total emerging market premium, up from 37% in 2000.
In India shrinkage in premiums was due to tighter regulations on distributions of ULIPs and in China it was due to authorities set stringent regulations on bancassurance. This resulted in life insurance premium falling 15% in China and 8.5% in India.
Global insurance premium collection contracted 0.8% in 2011. However, because US dollar depreciated against other major currencies in 2011, premium increased 6% in nominal terms to $4597 billion. Life insurance accounted for 57% of total premiums.
