The Indian insurance industry witnessed high growth rates since FY01, when private participation was allowed. The premium income multiplied 5.6 times to INR 3.6tn in FY13 (from INR 629bn in FY02) due to favourable economic variables. Private sector companies led the innovation process and invested in setting up strong distribution channels. However, the global financial crisis and the resulting slowdown impacted the industry. Since then, premium growth, penetration and insurance density has suffered. In addition, the Indian economy has witnessed other structural headwinds such as high inflation and unemployment. However, improving prospects for the global and domestic economic recovery have enhanced the scenario for the Indian insurance industry. The next phase of growth is likely to be driven by increasing demand for retirement, pension, tax savings and life cover products. Increasing discretionary spending by consumers and push for specific insurance products such as micro insurance, health insurance, etc. is expected to aid the recovery. Regulatory issues such as transparency in costing of products and improving customer service would help draw more consumer-spending on insurance.
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