India’s insurance sector is poised for significant growth, with Assets Under Management (AUM) expected to rise from USD 0.7 trillion in 2023 to USD 11 trillion by 2047, according to a report by Boston Consulting Group (BCG) and the India InsurTech Association (IIA). This growth aligns with India’s broader economic goals, including achieving “Health for All” by 2047, with the country’s GDP projected to reach USD 30 trillion by then.
The report highlights that India’s financial assets are also set to grow substantially, reaching USD 120 trillion by 2047 from the current USD 6.4 trillion. Despite these promising prospects, insurance penetration remains low, especially in health and non-life insurance.
Health insurance penetration in India is just 0.31%, significantly lower than the United States (5.26%) and China (0.77%). Non-life insurance penetration stands at 1%, compared to 1.8% in China and 9.3% in the US. Life insurance penetration in India is relatively better at 2.8%, but still lags behind the global average of 2.9%.
The report emphasizes the urgent need to expand health insurance coverage, as 45% of medical expenses in India are paid out-of-pocket. The goal is to achieve universal coverage and reduce out-of-pocket medical expenses to less than 10%. India aims to become the third-largest insurance market globally, with over 10 companies in the global top 50 and more than 100 InsurTech companies operating at scale.
“Driving penetration is a key focus area; health insurance is the most underpenetrated with 45%+ medical spends still out of pocket,” the report states.
India’s evolving InsurTech sector is playing a pivotal role in this transformation. Over 75% of InsurTech companies are focusing on building profitable operating models, and more than two-thirds are pursuing strategic partnerships and expanding into new markets.
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While India has made progress in improving insurance penetration, there is significant potential for growth, particularly in health and non-life insurance. Achieving these ambitious goals will be vital for ensuring the financial well-being of India’s population in the decades to come.
