Risk-Based Capital Development In India

Featured in society of actuaries

By Steven Chen and David Fishbaum
This article won first prize in a country feature article competition by the Society of Actuaries and first appeared on their newsletter, Issue 77, May 2019.

India has one of the largest markets in the world, with significant demographic advantages. The insurance sector has continued to grow in scale over the years. Total premium income has grown at a compound annual rate of 11 percent, with remarkable growth and development in the private sector. Life insurance accounts for about 75 percent of the total premium, reflecting the role played by life insurance in savings and investment markets. Growth rates in non-life insurance have been consistently higher than those in life insurance. However, the insurance penetration rates remain low, especially in the non-life market.

One unique characteristic of the Indian insurance market is that although private insurers are large in number, more than 65 percent of the market share, by premium income, comes from public sector insurers. Designing and implementing a new risk-based capital regime will be a significant undertaking. With the right approach and the support from all stakeholders, a robust risk-based capital regime can take the Indian insurance industry to the next level.

Risk-Based Capital Development In India