General insurance penetration in India is among the lowest in the world, according to a report by a committee constituted by the Insurance Regulatory and Development Authority. Measured as a percentage of gross domestic product (GDP), general insurance premium is just 0.6% in the country, compared with 3.4% in the UK and 4.8% in the US, says the report prepared by the committee that studied insurance distribution channels. Among Asian countries, general insurance premium against GDP is 2.2% in Japan 1.7% in Malaysia and 1% in China.
The low penetration in general insurance is primarily because of low demand for retail insurance products, the report said. “It is estimated that about 80% of the two-wheelers plying on the road are not insured, more than 90% of the population is not covered under health insurance and almost 99% homes are uninsured.” However, in life insurance coverage, India’s position with premium payment as a percentage of GDP at 4.1% is higher than China (1.7%) and Malaysia (3.2%). That figure is 8.3% for Japan, 13.1% in the UK and 4% in the US. The report, however, says the general insurance segment has huge potential due a young population engaged in wealth creation, rapidly growing middle-class, availability of organized credit, robust demand for cars and two-wheelers as well as the potential in the health sector and the home insurance market.