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Insurance Trends - 2016

Numerous senior executives in the insurance industry foresee the Indian insurance witnessing robust growth in 2016, backed by favourable Government initiatives and overall economic growth in the country.

Growth Drivers For The Overall Insurance Market This Financial Year:

  • Higher interest showed by Indians towards healthcare and insurance
  • Infrastructure investments
  • People increasingly relying on their insurance providers as sources of credible healthcare information to assist them in better decision making will mean better business for health insurance
  • ICICI Lombard’s report ‘General Insurance: Trends and Outlook for 2016’ states that growing customer awareness, an increase in catastrophic events and regulatory changes that are ‘pro’ consumer, will collectively drive the health insurance sector’s growth
  • Rising medical inflation, coupled with the fact that customers today evaluate the credibility of hospitals (in terms of doctors’ association and treatment facilities) and seek the best healthcare as far as possible, is increasing the demand for health insurance
  • The ‘Make in India’ initiative, smart-cities initiative, and several other reforms are likely to provide a boost to the manufacturing sector, which would translate to better business for property and marine cargo insurance
  • Increased national and international travel will underpin the growth of travel insurance
  • The Motor Insurance industry in general is predicted to do well this year. Also, better pay scales are improving people’s purchasing power, leading to an increased demand for automobiles, as a result of which the auto insurance market will flourish
  • Stalled infrastructure projects would kick off this year, therefore, the engineering insurance sector will do well
  • With the cap for foreign direct investment (FDI) increased to 49%, it is expected that several foreign players will soon set foot into the Indian insurance market. Since insurance is a capital-intensive business, upping the FDI gives foreign players an opportunity to invest in India’s insurance market and grow their business here through digital initiatives and channel development

ICICI Lombard’s report has identified various important health and motor insurance trends, which will assist general insurers to devise new policies and initiatives, driven by growing consumer demand.

Motor Insurance Trends

Changing Preferences: Current trends indicate a shift in consumer behavior. Today, vehicles with elaborate features and high-end design are growing in popularity across different price points and segments.

Growing Popularity Of App-Based Aggregators: Customer preferences are increasingly tilting towards app-based aggregators (Uber, Ola, etc.), because of higher convenience at similar costs along with discounts and attractive offers. This trend is validated further from the fact that although the organised taxi market accounts only for around 5% of all taxis across the country, the market is growing almost at 20% annually. The self-driven rental car segment also looks promising, with various services operating in the market with thousands of cars. Such trends may be responsible for motor insurance purchase gradually drifting towards these segments.

Impact Of Natural Calamities: Another key observation that came forth from ICICI Lombard’s report was that natural calamities like cyclones and floods have been happening often, and specific losses like hydrostatic lock cases go up drastically during such times. Natural calamities cause total loss of vehicles. Despite increased awareness about such losses, add-on covers like Engine Protect and RTI are still purchased minimally.

Insured Versus Uninsured Vehicles And Two Wheelers: Some studies show that of the 32.9 million vehicles (excluding two wheelers) registered in India, 9.5 million are uninsured. Two wheelers account for roughly 70% of total vehicles in India, and approximately 75% of two wheelers in the country run without insurance - no insurance or lapsed insurance. Fortunately, since two-wheeler insurance premium payment is one-time, there are no annual renewal hassles and a common No Claim Bonus for three years is provided by motor insurance companies. This is another positive development for motor insurance companies.


  • Some experts feel that a major challenge for the general insurance sector could be profitability, mainly due to unreasonable price wars marring most insurance product segments. The Indian insurance sector has to therefore start adopting appropriate measures to correct and stabilise overall prices. 
  • Majority of India’s rural population lacks sufficient monetary means to invest in insurance.

The Road Ahead 

President – Insurance, Tata AIG General Insurance, Mr M Ravichandran, expects the growth rate for the overall Indian insurance industry to be around 15% this financial year.

The life insurance sector is expected to grow by about 12-15% by 2020.

India Brand Equity Foundation’s Sectoral Report of July 2015 highlighted that India’s insurance sector’s market size will most likely leap from the present USD 67 billion (approximately) to around USD 350-400 billion in the next five years. This can be attributed to the fact that investments in the pension sector of India are likely to cross USD one trillion in the next 10 years.

A huge challenge in the Indian insurance industry is that despite the population explosion, the country’s ‘insurable’ population remains at an all-time low. However, it is expected that this scenario will change soon, and India’s insured population will hit almost 75 crores in the next half-decade.

An overall positive change for the insurance sector in India will be brought about by: 

  • Positive changes in the political scenario
  • Improving economic conditions and demographic factors
  • Growing acceptance by Indians that since the future is unpredictable, the wisest move is to be insured
  • A growing population of wealthy Indians, leading to higher investments in insurance 


Outlining how 2016 will pan out for the insurance industry, Chief - Underwriting, Claims and Reinsurance, ICICI Lombard, Mr Sanjay Datta said, “We believe that the year ahead will be good for the General insurance sector, including for the larger pieces of health and motor insurance. With the expected changes on the policy front and overall strengthening of the macro-economic scenario, the industry is poised to enhance its value proposition across the product and service spectrum. It should be an exciting 2016 for Health and Motor insurance customers.”