According to the latest IRDAI annual report for Fy 23-24, released today after its ratification in the winter session of Parliament the insurance penetration for life insurance industry has again marginally declined from 3 per cent in the previous year to 2.8 per cent during 2023-24. The penetration for non-life insurance industry remained same at 1 per cent during the reporting year
Hyderabad: In a stark reminder to the government and segment regulator IRDAI that larger reforms in the Indian insurance sector are overdue, one of the key parameters of the sector – insurance penetration has fallen further to 3.7 per cent in FY 2024 from 4 per cent in FY2023.
Despite all round efforts by the government and the regulator, overall insurance penetration, assessing the spread of insurance in the country by calculating the contributions of insurance premium to the GDP, has shrank marginally consecutively for the second year.
It had fallen to 4 per cent in 2022-23 from the level of 4.2 per cent in 2021-22, primarily due to lesser contribution from the life insurance sector.
According to the latest IRDAI annual report for Fy 23-24, released today after its ratification in the winter session of Parliament , the insurance penetration for life insurance industry has again marginally declined from 3 per cent in the previous year to 2.8 per cent during 2023-24.
The penetration for non-life insurance industry remained same at 1 per cent during the reporting year.
However, in 2023-24, the insurance density in India showed a modest rise, increasing from $92 in 2022-23 to $ 95 in 2023-24. Specifically, non-life insurance density increased from $ 22 to $ 25, while life insurance density remained stable at $ 70.
This upward trend in insurance density has been consistent since 2016-17.
After hovering between 3 per cent and 4 per cent for almost a decade, insurance penetration in the country had inched up to 4.2 per cent in Fy2020-21 when Covid 19 pandemic outbreak had happened.
India’s highest ever insurance penetration was 5.20 per cent in FY2009-10.
With 73 players across the sectors, in FY 24, the Indian insurance industry had a total premium of over Rs 11.19 trillion (with life sector contributing over 70 per cent) and total assets of over Rs 67.58 trillion.
During 2023-24, the life insurance industry recorded the premium income of Rs 8.30 trillion registering 6.06 per cent growth. The non-life insurance industry underwrote a total direct premium of Rs 2.90 trillion crore registering a growth of 12.76 per cent from previous year.
As per Swiss Re Sigma World Insurance Report, globally insurance penetration and density were 2.9 per cent and $361 for the life segment and 4.2 per cent and $528 for the non-life segment.
Overall, insurance penetration and density were 7 per cent and $ 889 respectively in 2023.
Insurance penetration and density are two metrics, among others, often used to assess the level of development of the insurance sector in a country.
While insurance penetration is measured as the percentage of insurance premiums to , insurance density is calculated GDP as the ratio of premium to population (per capita premium).
In 2022, India was ranked as the 10 largest insurance market in the world with a premium volume of $ 131 billion (with 1.9 per cent share in global insurance premium) and it is projected to become the sixth largest by the year 2032 as India’s insurance market is one of the fastest growing insurance markets in the world, said the Irdai.
The growth outlook for India is based on strong economic growth, rising disposable incomes, a young population, increased risk awareness, digital penetration, and regulatory developments, explained the regulator.