Life insurance sector witnessed decline in its penetration and density while non-life saw a marginal growth.
Owing to a slowdown in economy and continuous reduction in new business premium collection, the insurance industry witnessed a decline in its penetration and density.
The penetration of the insurance industry fell to 3.96% in FY 2012-13 compared to 4.10% in FY 2011-12. The penetration of the industry recorded its highest level of 5.20% in FY 2009-10 and 5.10% in FY 2010-11. Similarly, insurance density which was at its peak at 2010-11 with $64.4 has now slipped to only $53.3 in FY 2012-13, shows the IRDA data. The insurance density was at $59 in FY 2011-12.
The measure of insurance penetration and density reflects the level of development of the sector. While insurance penetration is measured as the percentage of insurance premium to GDP, insurance density is calculated as the ratio of premium (in US $) to total population (per capita premium).
“The data indicates that during the past three years, the growth in insurance premium is lower than the growth in national GDP,” states the IRDA annual report.
Life insurance sector saw a decline in its penetration for the third consecutive year. The sector recorded a penetration of 3.17% in FY 2012-13 compared to 3.40% in FY 2011-12 and 4.60% in FY 2010-11. Similarly, insurance density stood at $42.7 in FY 2012-13 against $49 in the corresponding period last year.
On the other hand, general insurance sector saw a marginal growth in insurance penetration as from 0.70% in FY 2011-12 to 0.78% in 2012-13. Similarly, insurance density of non-life sector rose to $ 10.5 FY 2012-13 to $10 in FY 2011-12. Experts attribute this to increase in sale of health insurance policies due to rising cost of treatment and expansion of non-life network in small cities and town.