Life insurers to see 7.5% premium growth in 2012

The life insurance sector will rebound from the slowdown seen this year to post a 7.5 per cent growth in new premium, while strong demand in the motor and health insurance businesses will help the general insurance business in India grow by 7.9 per cent in 2012, according to a forecast report by reinsurance firm, Swiss Re.

Unlike other Asian markets, which saw a strong growth in life insurance business in 2011, the business grew only 2.5 per cent in India due to various regulatory issues. China too saw negative growth of 6 per cent, also due to regulatory tightening of product distribution and design. Other Asian markets, like Indonesia (11.9 per cent) and the Philippines (12.9 per cent), saw strong or stable growth.

“Growth in life insurance premiums is expected to rebound in India and China in 2012 at real rates of 7.5 per cent and 11 per cent, respectively. Annuities and health products are likely to continue growing robustly, along with demand for protection-type products,” says Amit Kalra, Swiss Re India’s head of economic research and consulting team.

Life insurance premium amounts will see a moderate growth of 4.5 per cent in 2012 due to factors like slower economic growth and higher unemployment. The uncertainty will also favour the growth of traditional, protection-type products, the forecast said.

In the non-life insurance business, 2011 saw most developed markets in Asia record stable growth in premium. Growth was at 8.6 per cent in India compared with a 15 per cent seen in China and 10.3 per cent in Indonesia. The growth in India was due to an increase in vehicle sales and higher demand for health and personal accident products, according to the report.

However, a slower economic growth in 2012 is likely to affect most non-life insurance business across the region, the report reasons. In 2012, non-life insurance premium in India is expected to ease to 7.9 per cent due to the higher base effect and the slowdown expected in vehicle sales.

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