The share of insurance premiums in India’s gross domestic product (called insurance penetration) saw a marginal increase to 3.69 percent in FY18 from 3.49 percent a year ago. According to the Swiss Re sigma report, insurance density or premium per person stood at $73 for FY18 versus $59.7 in the previous year.
Among segments, life insurance penetration rose slightly from 2.72 percent in FY17 to 2.76 percent in FY18. Non-life penetration was at 0.93 percent in FY18 compared to 0.77 percent a year ago.
This is, however, much lower than the global average. The world average for insurance penetration is 6.13 percent while world average insurance density is $650. While the government schemes have aided a growth in the insurance penetration and density, India’s numbers are much lower than the Asian average too.
“In India, growth was still impacted by the November 2016 demonetisation, real estate regulation, and goods and services tax reforms. Consequently, private consumption growth was a little weaker than expected, and private investment was also sluggish, but government investments accelerated in the final quarter of the year, providing momentum into 2018,” the report said.
In FY15, India’s insurance penetration was at a 10-year low of 3.3 percent, down from 3.9 percent in FY14. This was the lowest since 2005-06 when the penetration dropped to 3.14 percent.
Insurance premium started to see a gradual decline from FY10 onward after a continuous surge since the financial year 1999. Later, from FY16, the country started catching up with global peers and the penetration levels started to see an uptick. In FY10, India had the highest ever rate of insurance penetration at 5.2 percent.
In absolute terms, there was a growth in emerging Asia´s life insurance sector with premiums rising 18 percent in 2017 supported by broad-based gains in most markets. The sigma report also said the strong equity market performance over the year increased the attractiveness of investment-linked products.
In India, life premiums grew by 8 percent year-on-year (YoY) to $73,240 million in FY18 driven by strong immediate annuity sales and group business. On the non-life front, the country benefitted from a strong crop insurance growth, showing a rise of 16.7 percent YoY to $24,674 million in FY18.
“Due to the sheer size of its population and the economy, China will remain the biggest contributor to global insurance market growth among emerging markets for the next decade at least. However, fifty years from now, the world‘s fastest growing insurance market could be India, Indonesia, Brazil, Mexico, Pakistan, Nigeria or Ethiopia,” said the report.