Mumbai: If you don’t have an insurance policy, you are not alone. Insurance penetration in India continues to be one of the lowest at 3.69%, according to the annual report by IRDAI. “Insurance penetration in India was at less than 1% when the industry opened up for private companies in FY 2000-01. (Insurance penetration is calculated as first year new business premium to GDP),” said Anand Pejawar, president-operations, IT and International Business, SBI Life Insurance.
According to the report, the life insurance penetration was at 4.6% in 2009 but visibly showed a downward trend after that. According to Pankaj Razdan, CEO, Aditya Birla Sun Life Insurance Co. Ltd, volatility in the stock market in 2008-2009 and regulatory changes in 2010 adversely impacted the sale of Ulip (unit-linked insurance plan) products and premiums. “Penetration in India reflected a flat trend of 2.7% from FY 2014-15 to 2016-17. However, since 2014, the industry witnessed an increase in the premium per person,” said Razdan.
According to the report, the new business premium for life insurance has increased from Rs. 9,707.4 crore in FY 2000-01 to Rs. 19.41 trillion in FY 2017-18. Though there has been a growth in absolute number, the rate of growth of new business premium has slowed.
“Demonetisation in 2016-17 resulted in a lot of money flowing into investment avenues, one of which was the life insurance sector. With the high base effect due to demonetisation, it has been difficult to sustain the same rate of growth in subsequent years,” said Vighnesh Shahane, managing director and chief executive officer, IDBI Federal Life Insurance.