A report released on global insurance industry published by Credit Suisse found that the insurance penetration in India remained very low at 3.44% in the calendar year 2015. However, the report says that low insurance penetration in India provides large untapped potential to the insurance companies and intermediaries.
The measure of insurance penetration reflects the level of development in the industry. Insurance penetration is measured as the percentage of insurance premium to GDP.
In a press release, Credit Suisse said, “Insurance penetration in India remained low at 3.44% in 2015 compared to the global average of 6.23%, reflecting large untapped potential. Robust economic growth and government enabling policy actions/initiatives are expected to increase insurance penetration and will act as a catalyst for future growth of the industry.”
IRDAI data shows that the penetration of the insurance industry fell to 3.3% in FY 2014-15 compared to 3.9% in FY 2013-14. The penetration of the industry was the highest at 5.20% in FY 2009-10 and 5.10% in FY 2010-11.
The insurance penetration data for FY 2015-16 is not published on IRDAI website yet. According to Credit Suisse report, the insurance penetration of FY 2015-16 is likely to be higher than previous year’s figure.
Industry experts said that the reason behind low insurance penetration in India is due to low renewal rates.
Meanwhile, the report found that total insurance premiums of the Indian insurance industry (both life and non-life) went up by 7.9% in 2015, compared to a contraction of 1.2% in 2014.
The life insurance industry premium collection witnessed a growth of 7.8% in 2015 compared to a contraction of 2.1% in 2014. The recovery was underpinned by investment-linked products which posted strong growth through bancassurance channels, said the report. Also, non-life premiums growth also picked-up, growing by 8.1%, compared to a growth of 2.2% in 2014. The growth was led by stronger health and motor third party liability premiums.