The Indian Insurance Industry: Challenges and Prospects

84 Pages Posted: 15 Sep 2005

See all articles by Tapen Sinha

Tapen Sinha

Chennai Mathematical Institute; Nottingham University Business School; Instituto Tecnológico Autónomo de México (ITAM) - Division of Actuarial Science, Statistics and Mathematics

Date Written: September 2005


This paper begins with an overview of the Indian insurance market in Section II, which highlights the phenomenal growth experienced recently, in line with the country's improving economic fundamentals. Section III benchmarks the Indian insurance market against other regional counterparts. By comparing growth, penetration, density and other insurance variables, it can be shown that, whilst India is still an underdeveloped insurance market, it has a huge catch-up potential. Section IV presents a necessary overview of the historical development of the sector, but the relevance to the current marketplace is not lost, as the original 1938 Insurance Act still forms the backbone of present insurance regulation. A more detailed dissection of current regulatory issues is offered in Section V. Sections VI and VII discuss issues in the life and non-life insurance sectors respectively. Developments with far-reaching implications, like the proliferation of bancassurance as an alternative distribution channel and the move to allow non-life insurance companies greater freedom in pricing their products, are looked at in detail. Finally, Section VIII summarises the potential and pitfalls of rural insurance in India. Even though there is strong potential for expansion of insurance into rural areas, growth has so far remained slow. Considering that the bulk of the Indian population still resides in rural areas, it is imperative that the insurance industry's development should not miss this vast sector of the population.

Keywords: Indian insurance industry, analysis, prospects

JEL Classification: G11, G22, G3

Suggested Citation

Sinha, Tapen, The Indian Insurance Industry: Challenges and Prospects (September 2005). Available at SSRN: or

Tapen Sinha (Contact Author)

Chennai Mathematical Institute ( email )

Chennai, 600017

Nottingham University Business School ( email )

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Instituto Tecnológico Autónomo de México (ITAM) - Division of Actuarial Science, Statistics and Mathematics ( email )

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