India's insurance sector is set to witness remarkable growth, with its Assets Under Management (AUM) projected to surge to USD 11 trillion by 2047 from USD 0.7 trillion in 2023, according to a report by Boston Consulting Group (BCG) and India InsurTech Association (IIA).
This expansion aligns with India's broader economic goals, including achieving "Health for All" by 2047, as the country's GDP is expected to reach USD 30 trillion by then.
The report also highlighted that India's financial assets are also anticipated to grow significantly, climbing to $120 trillion by 2047 from the current USD 6.4 trillion. However, despite the promising outlook, insurance penetration in the country remains low, particularly in the health and non-life insurance segments.
As per the data in the report, India's health insurance penetration is just 0.31 per cent, far below the levels seen in countries like the United States (5.26 per cent) and China (0.77 per cent). Non-life insurance penetration in India stands at 1 per cent, compared to 1.8 per cent in China and 9.3 per cent in the US.
On the other hand, life insurance penetration in India is relatively strong at 2.8 per cent, However, it still falls short of the global average of 2.9 per cent.
The report stressed the need to increase insurance coverage, particularly in health insurance, where 45 per cent of medical expenses are still borne out-of-pocket by individuals.
Multiple macroeconomic tailwinds are already driving growth in the industry. The goal is to achieve 100 per cent coverage for all citizens and reduce out-of-pocket medical expenses to less than 10 per cent. India envisions becoming the world's third-largest insurance market, with over 10 companies in the global top 50 and more than 100 insurtechs operating at scale.
It said "Driving penetration a key focus area; Health Insurance most underpenetrated with 45%+ medical spends still out of pocket"
The evolving InsurTech landscape is playing a critical role in driving these changes. Over 75 per cent of InsurTech companies in India are now focusing on building profitable operating models, while more than two-thirds are exploring strategic partnerships and expanding into new geographies.
The report highlights that while India has made significant strides in improving insurance penetration, there is considerable scope for growth, especially in the health and non-life insurance segments.
Achieving these goals will be crucial for securing the financial health and well-being of the country's population in the coming decades. (ANI)
