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IRDAI report reveals that the penetration of insurance in India has reduced to 3.7% in FY 2024 from 4% in FY2023.
Insurance penetration is a measurement done by dividing the percentage of insurance premiums received during the year by the GDP of the country.
In life insurance, the industry reported a decline to 2.8% in FY2024 from 3% in FY2023. On the other hand, non-life insurance’s penetration remained flat at 1% in 2024.
In comparison to global penetration, India is far behind the global average of 7%. India stood at 25th rank in global insurance penetration ranking.
While the global average in life insurance is 2.9%, the global average of non-life industry is 4.2% compared to just 1% of India.
Let’s look at the table to understand these figures:
Regions |
Life Insurance penetration 2023 |
Life Insurance penetration 2024 |
Non-Life Insurance penetration FY2023 |
Non-Life Insurance penetration FY2024 |
Total (Life+Non-Life) 2023 |
Total (Life+Non-Life) penetration FY2024 |
India |
3 |
2.8 |
1 |
1 |
4 |
3.7 |
World |
2.8 |
2.9 |
4 |
4.2 |
6.8 |
7 |
Note: The data for India is for financial year i.e. between April and March whereas for the world, it is of Calendar Year or period between January and December.
Manoj Kumar Jain, Managing Director, Shriram Life Insurance attributes this decline to lack of awareness among people and complexity in understanding insurance policies.
He pointed out that while the industry has grown in absolute terms, the penetration came down due to record GDP numbers.
Dr S Prakash, former MD, Star Health & Allied Insurance and Chairperson, Health Sub Committee, CII Southern Region feels that the industry should focus on creating a positive experience for the consumers. Also, the industry should focus on offering better pricing and identifying the right technology to increase the number of policyholders, he added.
Vighnesh Shahane, an industry veteran believes that insurance penetration should be measured in terms of number of people covered instead of premium received with respect to the size of GDP.