Life insurance sales in India grew 14% year-on-year to Rs 4.18 lakh crore from Rs 3.66 lakh crore, according to latest data from IRDAI. Non-life insurance saw whopping 31% growth to Rs 1.30 lakh crore. Insurance density in the general insurance sector also improved to 13.20% in 2016-17 from 11% in 2013-14, while life insurance density grew to 46.5% in 2016-17, from 41% three years ago.
In comparison to other countries, insurance density — measured as ratio of premium (in US dollars) to total population — India fared poorly, compared to other countries. In terms of insurance density, India has a coverage of $46.5 for every citizen, far below China ($189.9), Thailand ($222), Brazil ($195.5), South Africa ($615), Japan ($2,803), UK ($3,033) and US ($1,724).
When it came to life insurance penetration, India with 2.74% rolled past China (2.34%), Sri Lanka (0.52%), Brazil (2.28%) and Russia (0.25%) for the year ended March 2017.
Countries like Taiwan (16.65%), Hong Kong (16.20%), South Africa (11.52%), United Kingdom (7.68%), France (6.06%) were ahead of India in terms of insurance penetration — measured as a ratio of premium to GDP — while Australia (2.99%), US (3.02%) were nearly on par.
In life insurance, India’s total first premium collected increased 27% to 1.75 lakh crore from 1.38 lakh crore. The number of policies issued, however, dipped slightly to 265 lakh from 267 lakh. In general insurance, motor and health continued to be the biggest contributors to sector growth.
Of total gross direct premium generated for 2016-17 of Rs 1.28 lakh crore, motor contributed Rs 50,250.53 crore (40%) and health contributed Rs 34,526 crore (27%). Premium from other segments contributed 24% (Rs 30,895.72 crore) primarily because of the growth of crop insurance.
“According to a Mckinsey study India spends 4% of its GDP on health care. Of this roughly 9% is financed by insurance arrangement, 30% is financed by public expense (Government and NGO’s) and rest 61% is self financed. This level of self financing is bound to have negative consequence,” said Pankaj Nawani, VP, Max Life Insurance Co. “Last decade and a half has seen very rapid expansion of health insurance coverage in India. In 2003-04 the total premium for health insurance in India was Rs 1,370 cr ore which has risen in FY 2016 to Rs 21,000 crore. This is a CAGR of nearly 30%, making health insurance the fastest growing segment in the Indian Insurance sector.”