Global insurance with special reference to Indian market

The insurance sector is very significant to every developing country. It develops the habit of savings which, in turn, generates long-term investible funds for improving infrastructural facilities. The nature of insurance business ensures constant inflow of funds and challenges such as unprecedented volatility, changing customer profiles and existing regulators. Despite the challenges ahead, opportunities for growth can be anticipated by horizontal global expansion. The insurance premium in India accounted for a mere 2% of GDP as against the world average of 7.8% and G-7 average is 9.25 during 90’s. The insurance premium as a percentage of savings in India is 5.95% as compared to 52.5% in UK (IRDA, 2005).

The insurance market depends on a variety of economic and non-economic factors, and the future performance is difficult to predict. The forecast given in this article is not based on a complex economic model, but is intended as a guide to the direction in which the market is likely to move. This forecast is based on a correlation between past market growth and growth of base drivers, GDP growth and long-term interest rates. All currency conversions have been calculated at constant 2007 annual average exchange rates.