Total yearly premium of insurance companies in India is expected to rise five fold in 10 years. Policybazaar, in its draft IPO prospectus, sees the collection going up from Rs 7.60 lakh crore in FY 2020 to Rs.39 lakh crore in FY 2030.
The projection for life insurance segment is even higher. The filing shows that total premium collection is likely to grow almost six fold to Rs 31.9 lakh crore in FY 2030 from Rs 5.7 lakh crore in FY 2020.
The projections are based on a report prepared by Frost & Sullivan (India) on behalf of Policybazaar.
India lags global peers in insurance penetration
The draft offer document shows that India has a highly underpenetrated insurance market as the total sum assured was only 25% of the GDP in FY 2020 compared to 265% in US. South Asian peers like Malaysia and Thailand also have a much higher sum assured to GDP ratio.
The comparison of India's healthcare expenditure with other countries also presents a similar picture. India's per capita health expenditure was only Rs 5,500 in FY 2018 compared to Rs 83,300 in US and Rs 37,600 in China. The report further shows that the major part of healthcare expenditure is out of pocket in India. Only 37% of the total healthcare spend is borne by insurers and government.
The document noted that the low penetration is a result of financial illiteracy, lack of awareness of need and sufficiency of insurance, low household disposable income, complex products, gaps in product offerings and inefficiencies in distribution system.
“Opaque cost structures, hidden fees, difficult to understand language and jargons has made people averse to insurance products. With limited disposable income, it is also difficult for most people in India to pay annual premiums to protect their life, health and other assets,” the document said.