Insurance penetration inches up but stays much below global average: Eco Survey
2 min read . Updated: 29 Jan 2021, 06:17 PM IST
Premium- The insurance density in India, which was $11.5 in 2001 reached to around $78 in 2019. In comparison, figures for Malaysia, Thailand and China in 2019 were much higher at $536, $389 and $430, respectively.
India’s insurance penetration, which was at 2.71% in 2001, has steadily increased to 3.76% in 2019, but stayed much below the global average of 7.23%, stated the Economic Survey for 2020-21 released on Friday. The survey also highlighted that the penetration in India was particularly low for the non-life segment.
Insurance penetration is calculated as the percentage of insurance premium to the GDP.
“As of 2019, the penetration for life insurance in India is 2.82%, and the penetration for non-life insurance is much lower at 0.94%. Globally, insurance penetration was 3.35% for the life segment and 3.88% for the non-life segment," the survey said.
Also Read | Covid vaccination faces slow start
In comparison, insurance penetration in some Asian countries such as Malaysia, Thailand and China was at 4.72%, 4.99% and 4.30%, respectively, in 2019.
“Although the penetration is lower in India for both, it is particularly low for the non-life insurance compared with other countries," it added. The performance and potential of the insurance sector are assessed using two indicators — insurance penetration and insurance density, which is calculated as a ratio of insurance premium to population.
The insurance density in India, which was $11.5 in 2001 reached to around $78 in 2019. In comparison, figures for Malaysia, Thailand and China in 2019 were much higher at $536, $389 and $430, respectively.
“Density for life insurance is $58 and non-life insurance is much lower at $19 in 2019 in India. Globally, insurance density was $379 for the life segment and $439 for the non-life segment, respectively, in 2019. India has extremely low insurance penetration compared with global average and other comparable countries," the Survey noted.
In terms of the premium collected, the Survey said the life insurance industry recorded a premium income of ₹5.73 lakh crore in 2019-20 against ₹5.08 lakh crore in the previous financial year, registering a growth of 12.75%.
“While the renewal premium accounted for 54.75% of the total premium received by the life insurers, the new business contributed the remaining 45.25%," said the Survey.
For the non-life insurance segment, the gross direct premium was ₹1.89 lakh crore during 2019-20 against ₹1.69 lakh crore in 2018-19, registering a growth of 11.45%.
“This Budget is crucial across all sectors and companies as it will re-shape the slowdown faced in the last year. With the Covid-19 vaccination now a reality and economic survey estimating a 2.4% GDP growth through healthcare, this sector provides a ray of hope in the next fiscal for reenergizing India’s economy. This brings health insurance as well in focus, as it is critical for medical needs and emergencies. The government should definitely look at increasing the tax exemption limit under health insurance to bridge the insurance demand-supply gap and make healthcare accessible and affordable for everyone, especially in tier II and III cities," said Balachander Sekhar, CEO and co-founder, Renewbuy, an online insurance aggregator.
