India’s development has a huge progressive impact on many sectors, as well as on the life insurance sector in India. We all know about the importance of life insurance. But do you know what life insurance penetration in India is and how it works? If you are searching for it then you are definitely in the right place. Let us know in details about the life insurance penetration in India.
Let’s first know what life insurance penetration in India is:
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WHAT IS LIFE INSURANCE PENETRATION IN INDIA?
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The share of life insurance premiums in India’s Gross Domestic Product (GDP) is called life insurance penetration in India. The insurance penetration has encountered a minimal increase to 3.69% in the Financial Year 18 from 3.49 % a year ago i.e. 2017. According to a report, life insurance premium or density per person at INR 5,093.21 for Financial Year 18 versus INR 4,165.27 in the Financial Year 2017 has increased over the year.
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There is life insurance penetration in India that considers payments from life insurance plans only as a percentage of the Gross Domestic Product (GDP) and non-life insurance penetration in India which considers payments from other than the life insurance plans like health insurance, auto insurance, and so many other insurances.
India’s recent insurance penetration rate is 3.42%, which is far below the worldwide average of rate 6.2%, the industry report said so. Only 1% rise in the life insurance penetration in India interprets into 13% of the decrease in the uninsured losses. An augmented investment equal to 2% of the national Gross Domestic Product (GDP) and a 22% decrease in the taxpayers’ contribution stated the report.
The report also stated the current regulatory agenda of the life insurance industry is inadequate to uphold the life insurance penetration in India and the density despite the government’s objects to have a nation with full pension and insurance penetration.
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Among 17% of the world’s population, Indian life insurance industry accounts for at least less than 1.5 percent of the world’s entire life insurance policy premium as India has both inadequately penetrated and under-penetrated. In India General insurance corporations had gross direct premium at INR 1.27 lakh crore which is a growth of 32 percent in the financial year 2016-17.
The sharp development in the non-life insurance sector was mostly due to the development in motor and health insurance in India along with crop insurance plan, says the market participant. While the life insurance trade saw its business payment at approximately INR 1,75,021 crore as on March in the year 2017 as compared to approximately INR 1,387,60 crore on March in the year 2016 a growth of 26.13%.
Among the segments, the life insurance penetration in India increased slightly from 2.72% in the Financial Year 17 to 2.76% in the Financial Year 18. The Non-life insurance penetration was at 0.93% in the Financial Year 18 as compared to 0.77% in the Financial Year 2017.
However, in the last 5 years, there is an incline in the savings through insurance. There was a substantial decline in the quantity of placement of monetary savings in the life insurance funds and bank deposits and has an upsurge in the share of the Indian currency, pension and provident funds, claims on the government in the year 2015-16.