Growth of insurance industry in India

Insurance is a means of protection from financial loss. A certain type of loss can be covered by paying a
small premium. this tells that insurance is pooling of risks associated with a group of people.

Initial phase
The insurance industry is the backbone of the country’s Risk Management. The beginning of the Indian
insurance industry dates back to the nineteenth century. In 1818, Europeans started Oriental Life
Insurance Company in Kolkata (Calcutta) to exclusively serve their community. Colonial masters with
racial prejudice unfairly characterized the age and premium for Indians. The Indian policyholders paid
more premium than European counterparts. Indians desperately wished for Indian insurance companies
to set foot in the market. Bombay Mutual Life Assurance Society started in 1870 was the first Indian
insurance company to cover the lives of the Indians at normal rates. Triton Insurance Company Ltd in the
year 1850 is the first general insurance company. Gradually insurance business fledged into a huge
sector boosting the economy of India. Subsequently, in 1956 the life insurance sector was nationalized to
protect the interest of policyholders and increase penetration. In a similar way, the non-life insurance
sector was nationalized in 1971.

Privatization phase
In 2000, the sector was opened for private sector players as well. Currently, there are about 56 players,
including life, non-life insurers in India. The privatization of the insurance sectors saw a range of new
products and services being offered and effectively expanded the reach and impact of the sector. In 2014,
the government increased the Foreign Direct Investment (FDI) limit in the insurance sector from 26% to
49%. Insurance premiums in India are at 3% of GDP against the global average of 8%. This indicates that
the insurance industry in India is still a fledgling compared to its global counterparts and that it has a lot of
potential to grow
Technology oriented phase(Forward-looking phase)
The insurance sector is in the midst of a digital revolution as well. Insurers are providing customers with
innovative technological tools such as mobile apps and web aggregators to compare and purchase
insurance plans at the mere click of a mouse. New and emerging risks will demand more attention from
insurers. The world is in the grip of a technological revolution. 3D printing, nanotechnologies, autonomous
vehicles, telemedicine and the Internet of Things are just some of the ideas which have already started
gaining traction within the global community. It is estimated that these technologies will achieve scale and
start becoming widely adopted within the next decade. Cyber-insurance is another area that is expected
to grow, in order to provide protection to institutions towards their IT infrastructure and business
conducted via the Internet. With rising disposable incomes, technological advances and vast untapped
potential, India has stood out as a bright spot in the global landscape. The world’s fastest-growing major
economy is poised on the threshold of a bright future. With renewed thrust by the Government of India
towards self-reliance and financial inclusion through digitization, the ​insurance sector is set to act both
as a catalyst and a beneficiary. It has been said that the best way to predict the future is to
create it.
Key drivers to bring change in the insurance market
Analytics, Digital Revolution, Accessibility, Cohesive Health Ecosystem