India’s insurance sector is poised for remarkable growth, projected to more than double in value by 2030, reaching an impressive ₹25 lakh crore.
India’s Insurance Market on a Rapid Growth Trajectory
According to a new report from the Insurance Brokers Association of India (IBAI) and McKinsey & Company, India’s insurance industry is set for robust expansion. Gross underwritten premiums (GWP) are expected to surge by 123 percent, climbing from ₹11.2 lakh crore in 2024 to an estimated ₹25 lakh crore by 2030.
This significant growth is anticipated to boost insurance penetration in India from its current 3.7 percent to 5 percent. While this still lags behind the global average of 6.8 percent recorded in 2023, it marks a substantial step forward. The industry has already demonstrated strong double-digit growth, with total premiums across life and non-life segments increasing from ₹7.8 lakh crore to ₹11.2 lakh crore between FY 2020 and FY 2024.
Tapping into the Retail Segment Opportunity
The retail segment is a key driver of this projected growth, with its GWP expected to hit around ₹21 lakh crore by 2030. Over 90 percent of this growth is anticipated from the life insurance sector.
Interestingly, about 65 percent of the retail opportunity lies at the extreme ends of the customer spectrum: ultra-high-net-worth individuals (UHNI) and high-net-worth individuals (HNI) on one side, and the vast mass-market customer base on the other.
While many affluent customers understand the importance of insurance, there’s a noticeable gap between awareness and actual purchase. For instance, 60 percent of UHNI and HNI customers believe their ideal life insurance cover should be 10 times their salary, yet only 30 percent currently have this coverage.
Purchase behaviors also differ across segments. Affluent customers often rely on trusted advisors for insurance recommendations, while nearly half of mass-market customers turn to friends and family.
The Critical Role of Claims Experience
The report highlights that the claims experience is a crucial differentiator in the insurance journey. Dissatisfaction with the claims process has led half of affluent and HNI+ customers to consider or even switch their insurers.
This issue isn’t limited to retail clients. In the institutional segment, over 55 percent of Small and Medium-sized Enterprises (SMEs) have faced claim rejections. A staggering 75 percent of SMEs also report needing assistance with documentation and paperwork during the claims process.
Unlocking Potential in the Institutional Segment
The institutional segment, predominantly in non-life insurance, is also set for substantial growth, with GWP projected to nearly triple to ₹2.8 lakh crore by 2030. The SME segment, though currently contributing only about 10 percent, is expected to be the fastest-growing part of this sector.
A significant portion of the SME opportunity is concentrated in clusters across 17 Indian cities, spanning about 10 leading, capital-intensive industries such as textiles and pharmaceuticals. However, many SMEs often deprioritize insurance due to perceived lack of criticality, margin pressures, and insufficient guidance.
SMEs frequently purchase insurance due to regulatory or client mandates rather than proactive risk management. They often lack internal expertise and seek advisory support, tailored products, and assistance with documentation and claims processes. Equipping them with sector-specific products and risk foresight could significantly boost their insurance adoption.
- India’s insurance sector is predicted to more than double in size by 2030, reaching ₹25 lakh crore.
- Retail growth will be significant, particularly among ultra-high-net-worth and mass-market customers.
- Claims experience is a major factor influencing customer satisfaction and retention across all segments.
- SMEs represent a fast-growing institutional segment, but require tailored solutions and guidance to overcome barriers to adoption.
These insights, drawn from the IBAI Insurance Insights Survey of 2,500 retail customers, underscore the vast opportunities and critical areas for improvement within India’s evolving insurance landscape.
