The Indian insurance industry currently services only 10-20% protection requirements indicating that there is a huge insurance protection gap of 80-90% in India, said IRDAI Chairman, Dr. Subash C Khuntia, at the CII 22nd Insurance and Pensions Summit.
As on March 2019, insurance penetration in India in terms of premium is 3.76% of GDP while the world's average is 7.23% of GDP. Many developed countries have penetrated even more than the world’s average. On a positive note, this indicates a huge opportunity for insurance players in India, said Khuntia.
The IRDAI Chairman said, “In the life insurance segment, India’s penetration is 2.82% while world’s average is 3.35%. Meanwhile, in the non-life insurance space, the penetration rate is 0.94% as against the world’s average of 3.88%. This means we are just one fourth of the world’s average.”
He said that another advantage for the insurance industry is a growing economy. Until last year, we were among the fastest growing economies with the highest growth rate in the world. “I believe we will get back to growth track again once the pandemic gets over,” said Khuntia.
Talking about the state of economy, he said, India is the fifth largest economy in terms of nominal GDP and third in terms of purchasing power. This gives more comfort for insurance players to present protection schemes. Moreover, when the economy grows there is more need for protection, he added.
Further, India is the second largest populous country in the world with more than half the population below 30 years old. He said that 62.5% of the population is in the age group of 15-59. This indicates we have a low dependency ratio as our working population is quite high compared to western countries. This is expected to continue till 2055, the chairman added.