Life insurance will emerge as a dominant industry as household savings are moved to financial instruments like insurance and equities in the coming years, backed by strong economic growth, according to Indian stock brokerage Prabhudas Lilladher.
The stockbroking firm expects the gross life insurance premium to grow at an annualised rate of 18% to INR2.90 trillion (US$45 billion) by March 2020.
The outlook for insurance in India has changed from a savings or investment tool to a protection product, it says in a report.
While the ratio of household savings to the GDP is falling, financial savings rose from 44% to 58% of the GDP in five years to March 2017, Prabhudas Lilladher says. The share of insurance in financial savings improved from 21% to about 25% during the period, it said.
A big push came from last year’s demonetisation that funnelled cash into equities and insurance, a Reserve Bank of India report had said.
Many macro factors like the revival of the economy, better GDP growth and a push from the government will help the insurance business to grow, Prabhudas Lilladher says. Moreover, life insurance penetration in India stood at 2.7% in 2015, providing room for growth.