Updated: December 27, 2021 12:15:07 am
As the Indian economy registered record negative growth as a result of the Covid-19 pandemic, insurance penetration grew by an impressive 11.70 per cent—rising from 3.76 per cent in 2019-20 to 4.20 per cent in 2020-21.
Amid the mass anxiety due to illness and deaths, penetration of the life insurance sector rose from 2.82 per cent in 2019-20 to 3.20 per cent in 2020-21.
Non-life insurance penetration, led by health insurance, went up from 0.94 per cent to 1 per cent during the same period, according to the annual report of the Insurance Regulatory and Development Authority of India (IRDAI).
India’s GDP growth declined by 7.3 per cent in 2020-21 as Covid-19 lockdowns and other curbs hit business activity.
It has taken 20 years since the liberalisation of the insurance industry in 2000 for penetration of the domestic general insurance industry to reach the level of 1 per cent. This is an important milestone for the sector, with Covid catalysing the growth, insurance officials said.
The non-life insurance industry registered an accretion of nearly Rs 10,000 crore during the year, spurred by increasing awareness and mass government health insurance schemes, said Atul Sahai, CMD, New India Assurance and chairman of General Insurance Council, the representative body of general insurers.
“Some 20 per cent of the entire accretion, in terms of quantum, came through New India, and it is a remarkable feat,” Sahai said.
The insurance regulator’s report said general insurers and standalone health insurers received over 9.5 lakh Covid treatment related claims, which the industry “handled quite efficiently”.
During the first decade after liberalisation, the insurance sector reported an increase in insurance penetration from 2.71 per cent in 2001-02 to 5.20 per cent in 2009-10. Thereafter, the level of insurance penetration declined until 2014-15 due to a decline in life insurance penetration.
“The industry has been growing at a healthy CAGR (compound annual growth rate) over the last two decades and yet the penetration has touched just 1 per cent,” Sahai said. However, “the industry will soon resume its high growth trajectory and has the potential to double the business in the next 4-5 years,” he added.
According to IRDAI, insurance density, after increasing from $11.50 in 2001-02 to $64.40 in 2010-11, has stagnated at the level of $78 during 2019-20 and 2020-21. While life insurance density has stayed between $55 and $59 over the last four years, non-life insurance density has been between $18 and $19 during the same period.
The life insurance industry recorded a premium income of Rs 6.29 lakh crore during 2020-21 as against Rs 5.73 lakh crore in the previous financial year—a growth of 9.74 per cent (12.75 per cent in 2019-20). While private sector insurers posted 16.50 per cent growth (13.42 per cent in 2019-20) in their premium income, LIC recorded 6.30 per cent growth (12.41 per cent in 2019).
While renewal premium accounted for 55.67 per cent of the total premium received by life insurers in 2020-21 (54.75 per cent in 2019-20), new business premium contributed the remaining 44.33 per cent (45.25 per cent in 2019-20).
During 2020-21, the growth in renewal premium was 11.60 per cent (7.00 per cent in 2019-20).
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