As the Indian economy experienced record negative growth as a result of the Covid-19 pandemic, insurance penetration rose an impressive 11.70 percent – from 3.76 percent in 2019-20 to 4.20 percent in 2020-21 .
Amid the mass fear of illness and death, penetration of the life insurance sector rose from 2.82 percent in 2019-20 to 3.20 percent in 2020-21.
Non-life market penetration, led by health insurance, rose from 0.94 percent to 1 percent over the same period, according to the Insurance Regulatory and Development Authority of India (IRDAI) annual report.
India’s GDP growth declined 7.3 percent in 2020-21 as Covid-19 lockdowns and other containments weighed on business.
Since the liberalization of the insurance industry in 2000, it has taken 20 years for penetration of the domestic general insurance industry to reach the 1 percent level. This is a major milestone for the industry as Covid catalyzes growth, insurance agents said.
The non-life insurance industry grew nearly Rs 10,000 billion over the year under insurers.
“About 20 percent of the total accretion, measured by quantity, came from New India, and that is a remarkable achievement,” said Sahai.
According to the insurance regulator’s report, general insurers and stand-alone health insurers received over 9.5 lakhe claims related to the Covid treatment that were “handled fairly efficiently” by the industry.
In the first decade after liberalization, the insurance sector recorded an increase in insurance penetration from 2.71 percent in 2001/02 to 5.20 percent in 2009/10. Thereafter, insurance penetration decreased until 2014-15 due to a decrease in life insurance penetration.
“The industry has grown at a healthy Compound Annual Growth Rate (CAGR) over the past two decades, and yet penetration has only reached 1 percent,” said Sahai. “However, the industry will soon continue on its high growth path and has the potential to double the business in the next 4 to 5 years,” he added.
According to the IRDAI, after rising from $ 11.50 in 2001-02 to $ 64.40 in 2010-11, insurance density stagnated at $ 78 in 2019-20 and 2020-21. While life insurance density has stayed between $ 55 and $ 59 over the past four years, non-life insurance density has ranged between $ 18 and $ 19 over the same period.
The life insurance industry recorded premium income of 6.29 billion in the period 2020-21, while private insurers recorded a growth of 16.50 percent (13.42 percent in 2019-20) in their premium income, LIC recorded a growth of 6.30 percent ( 12.41 percent in 2019).
While renewal premiums accounted for 55.67 percent of total life insurance premiums in 2020-21 (54.75 percent in 2019-20), new business premiums accounted for the remaining 44.33 percent (45.25 percent in 2019-20) 20) at.
In the period 2020-21, the renewal premium grew by 11.60 percent (7.00 percent in 2019-20).