Insurance as share of GDP shrinks to 3.7% – Times of India

MUMBAI: India’s insurance penetration, which is measured as a ratio of annual premium to GDP, dipped in FY24 for the second year in a row after touching a peak of 4.2% in the wake of Covid.
According to regulator Irdai’s annual report released on Monday, India’s insurance penetration was 3.7% in FY24 compared to 4% in 2022-23. The insurance penetration for the life insurance industry marginally declined from 3% in the previous year to 2.8% in 2023-24. The penetration for the non-life insurance industry remained unchanged at 1% during 2023-24, as in 2022-23.
While the share of insurance to GDP declined, there was a modest increase in per capita premium (insurance density) from $92 in FY22 to $95 in FY23.
India’s experience goes against the global trend, where insurance penetration in both life and non-life segments has risen, with the global average at 7% in 2023 versus 6.8% in 2022.
During 2023-24, the life insurance industry recorded a premium income of Rs 8.3 lakh crore, registering a 6.1% growth which was slower than the increase in GDP. Private sector life insurers clocked a growth of 15.1% in premium, while the public sector life insurer recorded a growth of 0.2%.
The life insurance industry paid total benefits of Rs 5.8 lakh crore in 2023-24, constituting 70.2% of the net premium. Benefits paid on account of surrenders/withdrawals increased by 15.3% to Rs 2.3 lakh crore in 2023-24, of which the public sector life insurer accounted for 58.4%.
During 2023-24, the non-life insurance industry underwrote a total direct premium of Rs 2.9 lakh crore in India, registering a growth of 12.8% over the previous year. A significant portion of the increase was because of individuals paying a higher premium for health insurance coupled with growth in motor insurance. During 2023-24, general and health insurers settled 2.7 crore health insurance claims and paid Rs 83,493 crore towards claim settlements.
In FY24, general insurers, including specialised ones, paid total claims (excluding health insurance) amounting to Rs 1,01,050 crore. Of this, private general insurers paid 55% (Rs 55,524 crore), PSU general insurers paid 32% (Rs 32,131 crore), and specialised ones paid Rs 13,396 crore (13%).
As of March 31, 2024, investments made by the insurance industry stood at Rs 67.6 lakh crore, compared to Rs 60 lakh crore as of March 31, 2023, registering an increase of 12.6%. The share of life insurers stood at 91.1%, while general insurers (including specialised and standalone health insurers) constituted 7%, and reinsurers, including branches of foreign reinsurers, made up 1.9%. The share of PSUs stood at 69.5%, and the private sector constituted 30.5% during the same period.