Among top insurance

markets
India ranked 10
th
among 147 countries in the life insurance business, with a share of 2.03
per cent during FY13
The country ranked 19
th
among 147 countries in the non-life premium income, with a
share of 0.66 per cent in FY13
Rapidly growing
insurance segments
The life insurance premium market expanded at a CAGR of 16.6 per cent, from USD11.5
billion in FY03 to USD53.3 billion in FY13
The non-life insurance premium market rose at a CAGR of 15.4 per cent, from USD3.1
billion in FY03 to USD13.1 billion in FY13
Source: Swiss-Re, IRDA, Mckinsey estimates
Note: * Figures for FY13 are provisional
Increasing private
sector contribution
The share of private sector in the life insurance premiums increased from 5.7 per cent in
FY03 to 28.7 per cent in FY13
The market share of private sector companies in the non-life insurance premium market
rose from 9.5 per cent in FY03 to 42.9 per cent in FY13
Crop, Health and Motor
insurance to drive
growth
Crop insurance market in India is the largest in the world and covers around 30 million
farmers; it accounted for nearly 5 per cent of the total non-life insurance premium in FY12
Strong growth in the automotive industry over the next decade to be a key driver of motor
insurance
Health insurance continues to be one of the most rapidly growing sectors in the Indian
insurance industry, and reported 16.1* per cent growth in gross premiums in FY13
Growing demand
Source: IRDA
Notes: Estimate according to BCG, IRDA - Insurance Regulatory and Development Authority,
IPO - Initial Public Offering, FDI - Foreign Direct Investment
Strong demand
Growing interest in insurance
among people; innovative
products and distribution channels
aiding growth
Increasing demand for insurance
offshoring
Attractive opportunities
Life insurance in low-income
urban areas
Health insurance, pension
segment
Strong growth potential for
microinsurance, especially from
rural areas
Policy support
Tax incentives on insurance
products
Passing of Insurance Bill gives
IRDA flexibility to frame regulations
Clarity on rules for insurance IPOs
would infuse liquidity in the industry
Repeated attempts to make the
sector more lucrative for foreign
participants
Increasing investments
Rising participation by private
players has increased their market
share in the life insurance market
to 29.3 per cent in FY12 from 2
per cent in FY03
Increase in FDI limit to 49 per cent
from 26 per cent, as proposed in
2012, will further fuel investments
FY13
Market
size:
USD66.4
billion
CY20E
Market
size:
USD350 -
400 billion
Advantage
India
Source: IRDA
Notes: * - As of September 2012, LIC - Life Insurance Corporation of India,
GIC - General Insurance Corporation of India, IRDA - Insurance Regulatory and Development Authority
The life
insurance
sector was
made up of
154
domestic life
insurers, 16
foreign life
insurers and
75 provident
funds
All life insurance
companies were
nationalised to form
LIC in 1956 to
increase
penetration and
protect policy
holders from
mismanagement

The non-life
insurance business
was nationalised to
form GIC in 1972
Malhotra
Committee
recommended
opening up the
insurance sector to
private players

IRDA, LIC and GIC
Acts were passed
in 1999, making
IRDA the statutory
regulatory body for
insurance and
ending the
monopoly of LIC
and GIC
Post liberalisation, the
insurance industry recorded
significant growth; the number
of private players increased to
44 in 2012*

Customers are more conscious
of the benefits of insurance and
its importance for a secure
future

The industry has been spurred
by product innovation, vibrant
distribution channels, coupled
with targeted publicity and
promotional campaigns by the
insurers
Before 1956
195672
199399
2000 onwards
Source: IRDA, Aranca Research
Note: Data as of March 2013
Insurance Regulatory and Development Authority (IRDA)
Established in 1999 under the IRDA Act
Responsible for regulating, promoting and ensuring orderly growth of the insurance and re-insurance business in India
Insurance
Regulatory and
Development
Authority
(IRDA)
Life
Insurance
(24 players)
Non-Life
Insurance
(27 players)
Public (1)
Private (23)
Public (6)
Private (21)
Ministry of
Finance
(Government
of India)
Re-insurance
(1 player)
Public (1)
Source: Swiss Re, Aranca Research
Notes: Growth rate in USD terms and is inflation adjusted,
* - Figures for India correspond to FY11, FY12 and FY13,
IRDA - Insurance Regulatory and Development Authority
With a share of 2.03 per cent, India stood 10
th
among 147 countries in the life insurance business in FY13

The growth in non-life insurance premium in India outperformed the average global growth as well as the emerging markets
over 201012
Life insurance premium growth rates* in India,
emerging markets and the world
Non-life insurance premium growth rates* in India,
emerging markets and the world
10%
14%
10%
9%
8%
9%
2%
2%
3%
0%
4%
8%
12%
16%
2010 2011 2012
India Emerging World
-2%
-10%
-7%
11%
-5%
5%
3%
-3%
2%
-12%
-8%
-4%
0%
4%
8%
12%
16%
2010 2011 2012
India Emerging World
14.7 18.1
21.6
28.8
40.6
57.8
55.5
64.3
74.6
72.3
66.4
0.0
20.0
40.0
60.0
80.0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Non life insurance premium (USD billion)
Life insurance premium (USD billion)
Gross premiums written in India (USD billion)
Source: Swiss Re, Aranca Research
The total insurance market expanded from USD14.7 billion
in FY03 to USD66.4 billion in FY13

Over FY03FY13, total gross written premiums increased at
a CAGR of 16.3 per cent
CAGR: 16.3%
11.5
14.4
17.5
24.0
34.6
50.2
48.2
56.0
64.0
59.9
53.3
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Growth in life insurance premiums (USD billion)
Source: Swiss Re, BCG, Aranca Research
The life insurance market grew from USD11.5 billion in
FY03 to USD53.3 billion in FY13

Over FY03FY13, life insurance premiums expanded at a
CAGR of 16.6 per cent

The life insurance industry has the potential to grow 2-2.5
times by 2020 in spite of multiple challenges supported by
long-term trends and fundamentals underlying household
savings
CAGR: 16.6%
13.4
15.7
20.4
31.2
43.9
40.9
47.7
52.5
48.6
42.7
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: Swiss Re, Aranca Research
Note: Life insurance density* is defined as the ratio of premium
underwritten to the total population in a given year
Life insurance penetration increased to 3.2 per cent in FY13 from 2.6 per cent in FY04

Life insurance density* expanded from USD13.4 in FY04 to USD42.7 in FY13 at a CAGR of 13.7 per cent
Life insurance penetration (%) Life insurance density (USD)
CAGR: 13.7%
2.6
2.5
2.8
3.9
4.4
4.2
4.7
4.0
3.5
3.2
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: IRDA, Aranca Research
Share of private sector has been growing over the years, from around 2 per cent in FY03 to 27 per cent in FY13

The Gross Direct Premium of private companies increased from USD0.2 billion in FY03 to USD14.4 billion in FY13 at a CAGR
of 51.1 per cent
Share of public and private sector in life insurance
segment (%)
Share of public and private sector in life insurance
segment (USD billion)
98.0%
2.0%
FY03
Size: USD11.5 billion
Size: USD52.9 billion
72.7%
27.3%
FY13
Public Private
0
1 2
3
6
13 14
17
19
18
14
11
14
17
21
28
37
34
39
45
42
38
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Private (USD billion) Public (USD billion)
Market share of major companies in terms of total
life insurance premium collected (FY13)
Source: IRDA, Aranca Research
Notes: * - As of September 2013; Excluding reinsurer,
LIC - Life Insurance Corporation of India
Currently, the life insurance sector has 23* private players
compared to only four in FY02

LIC is still the market leader, with 72.7 per cent share in
FY13, followed by ICICI Prudential, with 4.7 per cent share
72.7%
4.7%
3.9%
3.6%
2.4%
2.3%
1.8%
8.5%
LIC
ICICI Prudential
HDFC Standard
SBI Life
Bajaj Allianz
Max Life
Birla Sunlife
Others
Share of linked and non-linked insurance premium
Source: IRDA, KPMG analysis
Notes: * - Growth rate in INR terms,
Linked Plans - In linked plans, a part of the investment goes towards providing you life cover while the residual portion is invested in a fund
which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund
In Non-Linked plans, a major chunk of investible funds are in debt instruments, giving steady and almost assured returns over the long term
The industry is witnessing a shift towards the traditional
non-linked insurance plans

The share of non-linked insurance increased from 59.1 per
cent in FY09 to 83.0 per cent in FY13

The non-linked premiums expanded at a CAGR of 16.1* per
cent to USD43.9 billion during FY09FY13
59%
57%
63%
76%
83%
41%
44%
37%
24%
17%
FY09 FY10 FY11 FY12 FY13
Linked Premium Non-Linked Premium
0.3 0.5
0.8
1.2
1.9
2.7 2.7 2.9
3.8
4.7
5.1 2.8
3.1
3.3
3.6
3.8
4.4
4.2
4.6
5.8
6.7
6.8
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Private (USD billion) Public (USD billion)
44
42
50
51
47
57
67
68
79
86
107
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: IRDA, Aranca Research
Note: * - Growth rate in INR terms
The non-life insurance market grew from USD3.4 billion in FY04 to USD12.7 billion in FY13*

Over FY04FY13*, non-life insurance premiums increased at a CAGR of 16.4* per cent

The number of policies issued increased from 43.6 million in FY03 to 107.0 million in FY13, at a CAGR of 9.4 per cent
Growth in Non-Life insurance premium
(USD billion)
Number of Non-Life insurance policies (million)
CAGR: 16.4*%

CAGR: 9.4%

3.5
4.0
4.4
5.0
6.3
6.0
6.7
8.7
10.1
10.5
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: Swiss Re, Aranca Research
The non-life insurance penetration rate was in the range of 0.60.8 per cent over 200413

Non-life insurance density increased from USD3.5 in FY04 to USD10.5 in FY13 at a CAGR of 13.0 per cent

The global average density of USD283.1 in 2012 indicates a huge potential for growth
Non-Life insurance penetration (%) Non-Life insurance density (USD)
CAGR: 13.0%

0.67
0.63
0.61 0.63
0.63
0.61
0.66
0.66
0.73
0.78
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Break-up of non-life insurance market in India
(FY13)
Source: IRDA, Aranca Research
Motor insurance forms the largest non-life segment at 43.2
per cent share in FY13, with Gross Direct Premium of
USD5,466.6 million

Medical insurance formed 21.8 per cent of the total in FY13,
with Gross Direct Premium of USD2,763.9 million

Motor third party insurance, which contributes nearly 50 per
cent of the total motor insurance premium, remained the
fastest growing segment in FY13 with Gross Direct
Premium of USD2,390.8 million
Total size: USD12.7 billion
43.2%
21.8%
9.8%
4.3%
3.6%
17.2%
Motor
Medical Insurance
Fire
Crop Insurance
Engineering
Miscellaneous and
others
57% 43%
FY13
Public Private
0.5 0.8
1.2
1.9
2.7
2.7
2.9
3.8
5.0
5.5
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
*
Source: IRDA, Aranca Research
Notes: * Figures for FY13 are provisional, ** Growth rate in INR terms
The market share of private sector companies rose from 14.5 per cent in FY04 to 43.0 per cent in FY13

The Gross Direct Premium of private companies increased from USD0.5 billion in FY04 to USD5.5 billion in FY13* at a CAGR
of 33.1** per cent
Growing share of private sector Non-life insurance premium of private sector
(USD billion)
CAGR: 33.1**%

Size: USD12.7 billion
Size: USD3.4 billion
85%
15%
FY04
Market share of major companies in terms of
Gross Direct Premium collected (FY13)
Source: IRDA, Aranca Research
Note: Excluding reinsurer
The number of companies increased from 15 in FY04 to 27
in FY13; six of these companies are in the public sector

The public sector companies together accounted for about
57 per cent of the total Gross Direct Premium in the non-life
insurance segment

New India leads the market with 16.7 per cent market share

Private players are not far behind and compete better in the
non-life insurance segment
Total size: USD12.7 billion
16.7%
13.0%
12.9%
9.5%
8.6%
5.6%
4.6%
29.1%
New India
United India
National
Oriental
ICICI Lombard
Bajaj Allianz
AIC
Others
Emergence of new
distribution channels
New distribution channels like bancassurance, online distribution and NBFCs have
widened the reach and reduced costs
Firms have tied up with local NGOs to target lucrative rural markets
Growing market share
of private players
In the life insurance segment, share of the private sector in total premiums increased to
29.3 per cent in FY12 from 2.0 per cent in FY03
In the non-life insurance segment, share of the private sector increased to 42.9 per cent in
FY13* from 14.5 per cent in FY04
Launch of innovative
products
The life insurance sector has witnessed the launch of innovative products such as Unit
Linked Insurance Plans (ULIPs)
Other traditional products have also been customised to meet specific needs of Indian
consumers
Notes: * - Figures for FY13 are provisional,
NBFC - Non Banking Financial Company, NGO - Non-governmental Organisation, EV - Embedded Value
Mounting focus on EV
over profitability
Large insurers continue to expand, focussing on cost rationalisation and aligning business
models to realise reported embedded value (EV), and generate value from future business
rather than focus on present profits
Household and financial savings projections
Source: ICICI, RBI Annual Report, Aranca Research
Notes: Financial savings denote investment in equity and
debt instruments, E - Estimates
Indias robust economy is expected to sustain the growth in
insurance premiums written

Higher personal disposable incomes would result in higher
household savings that will be channeled into different
financial savings instruments like insurance and pension
policies

Household savings are expected to grow to USD540 billion
by 2015E from USD89 billion in 2000

Financial savings are expected to grow to USD248 billion by
2015E from USD45 billion in 2000
89
306
369
540
2
0
0
0
2
0
1
0
F
Y
1
3
2
0
1
5
E
Household savings
(USD billion)
45
141
202
248
2
0
0
0
2
0
1
0
F
Y
1
3
2
0
1
5
E
Financial savings
(USD billion)
Indian residents shifting from low-income to high-
income groups
Source: McKinsey Quarterly, Aranca Research
Growing affluence of the middle class

The emergence of an affluent middle class is triggering
demand for both life and non-life personal insurance lines

A rising number of young professionals are opting for health
insurance, motor insurance and ULIPs
1
3
7
2
6
17
12
25
29
35
40
32
50
26
15
2008 2020 2030
Deprived (<1657)
Aspirers (1657-
3682.5)
Seekers (3682.5 -
9206.4)
Strivers (9206.4-
18412.8)
Globals (>18412.8)
Million Household, 100%
Income segment
Tax incentives
Insurance products are covered under the exempt, exempt, exempt (EEE) method of
taxation. This translates to an effective tax benefit of approximately 30 per cent on select
investments (including life insurance premiums) every financial year
Union Budget
201314
The proposed Insurance (Amendment) Bill is expected to empower IRDA to introduce
regulations for promoting sustainable growth, providing the flexibility to frame regulations
and increase the FDI limit to 49 per cent
The government has also extended Rashtriya Swasthya Bima Yojana (RSBY) to cover
unorganised sector workers in hazardous mining and associated industries
Life insurance
companies allowed to
go public
IRDA recently allowed life insurance companies that have completed 10 years of
operations to raise capital through initial public offerings (IPOs)
Companies will be able to raise capital if they have embedded value of twice the paid up
equity capital
Notes: RSBY - Rashtriya Swasthya Bima Yojana, FDI - Foreign Direct Investment
Approval of increase in
FDI limit and revival
package
Increase in FDI limit will help companies raise capital and fund their expansion plans
Revival package by government will help companies get faster product clearances, tax
incentives and ease in investment norms
The IRDA Act, 1999 allowed an FDI of up to 26 per cent in the insurance sector on an automatic route subject to obtaining
license from IRDA

Cabinet has approved an increase of FDI limit to 49 per cent through the Insurance Laws Amendment Bill (2008). The increase
in FDI limit will take effect following approval from the Parliament
Top Life Insurance Co Foreign partner Domestic partner Year of incorporation
Prudential plc (26%) ICICI Bank Ltd (74%) 2000
Allianz SE (26%) Bajaj Finserv Ltd (74%) 2001
BNP Paribas Cardif (26%) SBI (74%) 2000
Standard Life (26%) HDFC Bank (72.4%) 2000
Sun Life Financial, Inc (26%) Aditya Birla Group (74%) 2000
Nippon Life Insurance (26%) Reliance Capital (74%) 2005
Mitsui Sumitomo Insurance (26%) Max India (74%) 2000
Top Non-Life Insurance Co Foreign partner Domestic partner Year of incorporation
Fairfax Financial Holdings
Ltd (26%)
ICICI Bank Ltd (74%) 2000
Allianz SE (26%) Bajaj Finserv Ltd (74%) 2001
Tokio Marine & Nichido Fire
Insurance Group (26%)
IFFCO (74%) 2000
Source: Aranca Research
Religare Health Insurance USD110.4 million by 2016
IndiaFirst Life Insurance USD28 million in 2010; plans to invest USD45 million in 2011
Aviva Life USD26 million in 2010
Reliance Life USD58 million in 2011
Canara HSBC Life USD22 million in 2011
Bharti AXA Life Plans to inject USD100 million in 2011
AEGON Religare Life USD71 million in 2010; plans to invest USD445 million through 2016
ING Vysya Life USD53 million in 2010
HDFC Life Going public by FY14
Source: Towers Watson; Assorted News Articles; Aranca Research
Most of the existing players are tying up with banks to expand their distribution network

Few players like HDFC Life are planning to go public; others are selling stakes to generate funds
Investments from the private sector are increasing, as they see a huge opportunity in the growing insurance sector of
the country
Source: KPMG, Aranca Research
Note: TPA - Third Part Administrator
1999 2001 2006
C
H
A
N
G
E

I
M
P
A
C
T

IRDA cleared bill
Liberalisation of
sector and
formation of an
independent
regulator
IRDA issues TPA regulations
Foreign players allowed to
enter with 26 per cent FDI cap
Entry of TPAs specifically
focussed on servicing health
insurance business
Entry of foreign players infusing
capital and technical expertise
IRDA insurance
brokers and
corporate agent
regulation
Thrust on
insurance
distribution
through corporate
intermediaries
Entry of stand-
alone health
insurance players
allowed
Entry of stand-
alone health
insurance players
2002
Source: KPMG, Aranca Research
Notes: IRDA - Insurance Regulatory and Development Authority, CVTP - Commercial Vehicle Third Party,
TP - Third Party, CV - Commercial Vehicle
2007
2011
2012
Creation of Indian
Motor Third Party
Insurance Pool
Mechanism to
equitably share CVTP
losses
Merger and
Acquisition
guidelines
Enabled
consolidation,
inorganic
transactions in
the industry
Introduction of
Declined Risk
pool, TP
premium
increase
Improvement
in overall
profitability of
the CV
segment
Price detariffication
Significant change in
the premium rates for
the commercial lines
C
H
A
N
G
E

I
M
P
A
C
T

2013
FDI cap raised
from 26 to 49
per cent under
automatic
route by
cabinet
Cabinet
approval still
pending on
the FDI cap
increase
2010
IRDA came
out with new
guidelines for
equity-linked
insurance
products
Reduced the
first-year
agent
commission
and lock in
period
extended
1.4
1.6
2.1
2.8
2.7
1.9
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
8.4
39.2
58.2
80.3
116.0
121.9
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: SBI Life Annual Report, IRDA, Company website, Aranca Analysis
Note: * - Growth rate in INR terms
SBI Life Insurance is a joint venture between Indian banking giant State Bank of India (74 per cent) and France headquartered
BNP Paribas Assurance (26 per cent)

The company primarily deals in life insurance and pension plans with 758 offices across India. In FY13, it issued around 8.9
lakh insurance policies

Between FY08 and FY13, SBI Lifes profits increased at a CAGR of 81.1* per cent; in FY13, its annual profits increased to
USD121.9 million. It had the largest market share (16.9 per cent among all private sector companies in FY13) in the life
insurance new business premium
Total premium collected (USD billion) Net profit (USD million)
CAGR: 81.1*%

CAGR: 13.2*%

198.8
301.9
508.5
598.5
736.9
874.5
757.3
508.3
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
3.5
9.3
9.0
9.6
11.4
13.3
12.3
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
Source: Company Website, IRDA, Aranca Research
Note: * - Growth rate in INR terms
Tata AIA Life Insurance Company Limited (Tata AIA Life) is a joint venture between Tata Sons (74 per cent) and AIA Group
Limited (26 per cent)

The life insurance premium increased from USD198.8 million in FY06 to USD508.3 million in FY13 at a CAGR of 17.7* per
cent

The sum assured increased from USD3.5 billion in FY06 to USD12.3 billion in FY12, rising at a CAGR of 24.9* per cent
Total life insurance premium (USD million) Total sum assured (USD billion)
CAGR: 24.9*%

CAGR: 17.7*%

Objective for establishing microinsurance
Fulfilment of corporate social responsibility
Increase brand recognition to boost market entry
todays micro clients maybe tomorrows high-premium
clients
To target untapped markets and income groups of
rural India
The microinsurance business model
Source: Company website, Aranca Analysis
Key strategic decisions
The microinsurance business model must be
separated from business model
Selling microinsurance would require new, alternative
distribution mechanisms
New business unit
A special
microinsurance
team called the
Rural & Social
Team is formed
Partnering with
NGOs
Identify and partner
with credible NGOs
operating in the
local community
NGO suggests
good agents for
microinsurance
policies (micro-
agents)
Forming CRIGs
A group of micro-
agents called a
community rural
insurance group
(CRIG) is formed; it
relies on direct
marketing of
microinsurance
policies to local
community
members
Local operations
managed by NGOs
Local operations
like collecting and
aggregating the
premiums, training
micro-agents, and
helping to
distribute benefits
looked after by the
NGO; this saves
administrative
costs for Tata-AIG
Source: Company website, Aranca Analysis
Robust growth in micro-insurance expected
Number of policies Premium First year (FYP) and Renewals (RYP)
100,000
190,000
300,000
380,000
410,000
2008 2009 2010 2011 2012
400
900
1,800
2,400
2,800
0
300
800
1,900
3,200
2008 2009 2010 2011 2012
FYP RYP
Source: Company website, Aranca Analysis
217 256 297 329 355
111
111
133
159 142
528
538
621
778
850
295
331
443
494
512
254
263
311
341
327
FY09 FY10 FY11 FY12 FY13
Fire Marine Motor Health Miscellaneous and others
Gross Direct Premium (USD million)
Source: IRDA, Company website, New India Assurance Annual report
Notes: * Growth rate in INR terms, ** Figures for FY13 are provisional,
A.M. Best Europe Ltd, Alfred Magilton Best Company Limited
New India Assurance a wholly owned subsidiary of
Government of India; it is the largest non-life insurance
company in India with a market share of 14.5 per cent in
FY13** in the non-life insurance segment

It is the largest non-life insurer in Afro-Asia, excluding Japan

It serves the Indian subcontinent with a network of 1,068
offices, comprising 28 Regional offices, 393 Divisional
offices and 648 branches, with nearly 21,000 employees

The company has overseas presence in 22 countries:
Japan, UK, Middle East, Fiji and Australia

It has been rated as "A-" (Excellent) for six consecutive
years, indicating its excellent risk-adjusted capitalisation,
prospective improvement in underwriting performance and
leading business profile in the direct insurance market in
India

Its Gross Direct Premium increased from USD1,406.2
million in FY09 to USD2,186.2 million in FY13, at a CAGR
of 16.5* per cent
CAGR: 16.5*%

4.0
4.5
5.6
7.6
9.2
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
816.6 723.8
967.4
1,117.7
1,182.1
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Source: ICICI Lombard Annual Report, IRDA, Company website, Aranca Analysis
Notes: * - Growth rate in INR terms, ** - Figures for FY13 are provisional
ICICI Lombard GIC Ltd is a 74:26 joint venture between ICICI Bank Limited, Indias second largest bank, and Fairfax Financial
Holdings Limited, a Canada-based diversified financial services company

It is the largest private sector general insurance company, with a market share of 8.9 per cent in the non-life insurance sector
in FY13**

As of FY13, it has 2,757 pan India branches with an employee strength of 7,289

Its Gross Direct Premium increased from USD816.6 million in FY09 to USD1,182.1 million in FY13 at a CAGR of 14.4* per
cent
Gross Direct Premium (USD million) Number of policies issued (million)
CAGR: 23.4%

CAGR: 14.4*%

Source: Aranca Research
Opportunities
for Indian
insurance
market
Crop
insurance
Micro-
insurance
Health
insurance
markets
Motor
insurance
markets
Low-income
urban and
pension
markets
Urban low-income insurance penetration in India
Source: IRDA, Asia Insurance Review, Aranca Research
Note: E in the axis for the figures above refer to estimates
Urban low-income insurance penetration in India is
expected to have increased to 40 per cent in 2012 from 30
per cent in 2007

Rapid development in Tier II and Tier III cities and growth in
new bankable households have led to the emergence of a
large insurable class with an appetite for sophisticated life
insurance products

Insurance density and penetration remain at very low levels
compared to that in developed countries; this indicates a
strong potential for growth in future

Business models need to be customised accordingly to
maintain cost-effectiveness, as most low-income customers
would be small-ticket accounts, though huge in numbers
30%
40%
2007 2012E
Opportunity in the Indian pension and annuity
market
Source: McKinsey Quarterly, Aranca Research
Notes: PFRDA - Pension Fund Regulatory and Development Authority
* Expected value, at 2009-10 rates
Increasing life expectancy, favourable savings and
greater employment in the private sector will fuel
demand for pension plans

The opening of pension market with the passing of the
PFRDA Bill 2011 will make the pension market more
conducive for private life insurers

Proposed new pension bill by government will further
provide new opportunities to insurers

There is scope to introduce new-generation pension
products such as Variable Annuity and Inflation Indexed
Annuity
42
84
2010 2025E*
Indian retirement market (USD billion)
13%
87%
Formal pension system
penetration (2010)
Workers
covered
Workers not
covered
CAGR: 7%

Source: IRDA, Aranca Research
Notes: E in the axis for the figures above refer to estimates, * - ACMA Estimates, GDP - Gross Domestic Product
The number of new policies issued increased at a CAGR of 9.4 per cent from FY03 to FY13, from 43.6 million to 107.0 million

Despite strong growth, non-life insurance sector remains far from tapped, with penetration rates (premium to GDP ratios)
remaining low at 0.78 per cent in 2012 compared to an average of 4.5 per cent in the US and global average of 2.8 per cent

Strong growth in the automotive industry over the next decade will be a key driver of motor insurance

Proposed IRDA draft envisages a 1080 per cent rise in premium rates for the erstwhile loss-making third-party motor
insurance
Breakup of non-life insurance market in India (FY13) Vehicle production in India* (million units)
2.8
0.7
9.0 9.2
2.3
32.0
Car
Production
Commercial 2&3 wheelers
2010 2020E
43.2%
21.8%
9.8%
4.3%
3.6%
17.2%
Motor
Medical Insurance
Fire
Crop Insurance
Engineering
Miscellaneous and
others
Health insurance penetration (million policies)
Source: McKinsey Quarterly, Annual Report IRDA, Aranca Research
Notes: * Growth rate in INR terms
** Figures for FY13 are provisional
E - Estimate
Only 1.52 per cent of total healthcare expenditure in India
is currently covered by insurance providers

From 13.3 per cent of the total non-life insurance premium
in FY07, health insurance currently contributes 22.2** per
cent

Total health insurance premiums increased from USD733.1
million in FY07 to USD2,824.7 million in FY13** at a CAGR
of 29.1* per cent

Health insurance continues to be one of the most rapidly
growing sectors in the Indian insurance industry; it reported
16.1* per cent growth in gross premiums in FY13**

Absence of a government-funded health insurance makes
the market attractive for private players

IRDA recommended the government to reduce capital
requirements for stand-alone health insurance companies
from USD21 million to USD10 million
110
220
2005 2015E
CAGR: 8%
Population covered by health insurance (in million)
Source: Mckinsey estimates, Aranca Research
Notes: RSBY - Rashtriya Swasthya Bima Yojna,
ESIC - Employees State Insurance Corporation
Introduction of health insurance portability expected to boost
the orderly growth of the health insurance sector

Penetration of health insurance is expected to more than
double by 2020

Increasing penetration of health insurance likely to be driven
by government-sponsored initiatives such as RSBY and
ESIC

Government-sponsored programmes expected to provide
coverage to nearly 380 million people by 2020

Private insurance coverage is estimated to grow by nearly
15 per cent annually till 2020
35
130
20
25
55
120
80
240
110
140
2010 2020E
Private insurance Govt employee insurance
ESIC RSBY
State insurance
The business environment in Indias microinsurance sector supports healthy growth
Source: IRDA, McKinsey, Aranca Research
Macro level
(The enabling environment)
Intermediate level
(Support infrastructure)
Micro level
(Policy holders)
IRDA drafted microinsurance guidelines in 2010, which contain
numerous favourable measures such as
Lower threshold limits for agents commissions
Rural areas must account for 7 per cent of new life insurance
policies in the first year of firms operation and rise to 20 per cent
over the next 10 years
In order to reduce microinsurance distribution costs, IRDA proposed
microinsurance schemes to supplement existing government
insurance schemes
The number of regional rural banks and NGOs operating in the rural
sector will aid distribution of microinsurance products
The annual income growth rate in rural India is expected to increase
to 3.6 per cent over 201030 from 2.8 per cent during 19902010
About 5 million people currently have microinsurance, while the entire
market is expected to be in the range of 140300 million
Number of Micro-insurance policies (in millions) New business premium (USD million)
Source: IRDA, McKinsey, Aranca Research
2.1
3.0 2.6
1.5
12.6
16.8
16.3
13.3
14.7
19.8 18.9
14.8
FY09 FY10 FY11 FY12
Private Public Total
8.4
5.1 5.7 4.3
43.9
79.3
57.9
43.7
52.3
84.4
63.6
48.0
FY09 FY10 FY11 FY12
Private Public
Crop insurance coverage
Source: Agricultural Insurance Company of India Annual report,
Department of Agriculture and Cooperation, IRDA, Aranca Research
Note: * - Growth rate in INR terms
Crop insurance market in India is the largest in the world,
covering around 30 million farmers

Crop insurance accounted for nearly 5 per cent of the total
non-life insurance premium in FY12

To provide crop insurance to farmers, Government has
launched various schemes like National Agriculture
Insurance Scheme (NAIS), Modified National Agriculture
Insurance Scheme (MNAIS) and Weather-based Crop
Insurance Scheme (WBCIS)

The number of farmers covered increased at a CAGR of
11.5 per cent from FY08 to FY12, while the sum insured
rose at a CAGR of 22.0* per cent from USD6.5 billion to
USD12.1 billion over the same period

There is huge scope for increasing coverage, as only 30
million farmers out of 120 million are insured under crop
insurance schemes

Government of India plans to increase the coverage to 50
million during the 12
th
Five-Year Plan
18.4
19.2
23.9
17.6
16.7
0.4
1.2
0.7 0.4
2.4
9.3
11.7
FY08 FY09 FY10 FY11 FY12
Number of farmers covered (million)
NAIS MNAIS WBCIS
6.1 5.8
8.1
7.5
7.1
0.2
0.7
0.4 0.2
1.0
3.1
4.4
FY08 FY09 FY10 FY11 FY12
Sum insured (USD billion)
NAIS MNAIS WBCIS
Insurance Regulatory and Development Authority (IRDA)
3
rd
Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad500 004
Phone: 91-040-23381100
Fax: 91-040-66823334
E-mail: irda@irda.gov.in

Life Insurance Council
4
th
Floor, Jeevan Seva Annexe Bldg. S. V. Road, Santacruz (W),
Mumbai400054
Phone: 91-22-26103303, 26103306
E-mail: ninad.narwilkar@lifeinscouncil.org

General Insurance Council
5
th
Floor, Royal Insurance Building, 14, Jamshedji TATA Road, Churchgate,
Mumbai400020
Phone: 91-22-22817511, 22817512
Fax: 91-22-22817515
E-mail: gicouncil@gicouncil.in
CAGR: Compound Annual Growth Rate

IRDA: Insurance Regulatory and Development Authority

IPO: Initial Public Offering

FDI: Foreign Direct Investment

LIC: Life Insurance Corporation of India

GIC: General Insurance Corporation of India

NBFC: Non-Banking Financial Company

NGO: Non-Governmental Organisation

RSBY: Rashtriya Swasthya Bima Yojana

PFRDA: Pension Fund Regulatory and Development Authority

GDP: Gross Domestic Product

ESIC: Employees State Insurance Corporation
FY: Indian Financial Year (April to March)

So, FY12 implies April 2011 to March 2012

GOI: Government of India

INR: Indian Rupee

USD: US Dollar

Where applicable, numbers have been rounded off to the nearest whole number
Year INR equivalent of one USD
2004-05 44.95
2005-06 44.28
2006-07 45.28
2007-08 40.24
2008-09 45.91
2009-10 47.41
2010-11 45.57
2011-12 47.94
2012-13 54.31
Exchange rates (Fiscal year)
Year INR equivalent of one USD
2005 45.55
2006 44.34
2007 39.45
2008 49.21
2009 46.76
2010 45.32
2011 45.64
2012 54.69
2013 54.45
Exchange rates (Calendar year)
Average for the year
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