The Indian insurance sector has a total of 52 insurance companies, of which 28 are in non-life insurance business and 24 in life insurance. India’s life insurance sector is the biggest in the world with about 360 million policies and is expected to increase at a compound annual growth rate (CAGR) of 12-15 per cent over the next five years. The insurance industry plans to hike penetration levels to five per cent by 2020, and could top the US$ 1 trillion mark in the next seven years.
The industry is set to reach further heights, because of the proposal to permit FDI in insurance to 49 % from current 26%. The Insurance Regulatory Development Authority (IRDA) believes that the country’s insurance sector needs capital infusion of Rs 50,000 crore (US$ 8.08 billion) to expand reach, maintain a healthy capital base and enhance solvency standards and hence the demand for FDI infusion.