Insurance Penetration Rises to 3.4% in FY16

Insurance penetration in India has risen partially to 3.4% in financial year 2015-16 compared to 3.3% in 2014-15, according to Swiss Re's latest sigma report. The report said that total insurance premiums in India grew by 7.9% in 2015 owing to stronger growth in life and non-life premiums. Insurers said that this owing to the Jan Suraksha insurance schemes.

In FY15, insurance penetration had hit a 10-year low in India dropping to 3.3% of gross domestic product (GDP). "Insurance penetration in India remained low at 3.44% in 2015 reflecting large untapped potential," the report said. Insurance penetration refers to premiums as a percentage of GDP, whereas insurance density (measured in $) refers to per capita premium or premium per person.

Global insurance premiums grew by 3.8% in real terms in 2015, amidst variations in regional growth rates, Swiss Re's latest sigma report says. The overall performance was steady after a 3.4%-gain in direct insurance premiums written in 2014, and coming in an environment of just moderate (2.5%) global economic growth, the latter a key driver of insurance demand according to the report.

Under Pradhan Mantri Jan Suraksha Yojana that was launched in May 2015. This provides a pension scheme, a term insurance and an accident insurance scheme - Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), and Pradhan Mantri Suraksha Bima Yojana (PMSBY). The insurance covers are of Rs 2 lakh each with premium of only Rs 330 per year for the term insurance and Rs 12 per annum for the personal accident cover.

There was a slight slowdown in the life sector in 2015, with global premium growth dipping to 4.0% from 4.3%, due to weaker performance in the advanced markets. On the non-life side, strong growth in the advanced markets of Asia, and improvement in North America and Western Europe, contributed to a 3.6% increase in global premiums, up from 2.4% growth in 2014.

Penetration in India, surged consistently till 2009, had been seeing a gradual decline. However, last year due to the government sponsored insurance schemes including the term insurance and personal accident schemes has seen more than 100 million enrollments which have led to an increase in the reach of insurance in the country, according to insurance companies.

In India, total insurance premiums grew strongly by 7.9% in 2015, compared to a contraction of 1.2% in 2014. The improved performance was aided by stronger growth in both life and non-life premiums.Life premiums growth witnessed a turnaround in India, growing by 7.8% in 2015, compared to a contraction of 2.1% in 2014. The recovery was underpinned by investment-linked products which posted strong growth through bancassurance channels.The survey said that non-life premiums growth also picked-up, growing by 8.1%, compared to a growth of 2.2% in 2014. Growth was led by stronger health (including personal accident (PA)) and motor third party liability (MTPL) premiums.

The report said that robust economic growth and government enabling policy actions/initiatives are expected to increase insurance penetration and will act as a catalyst for future growth of the industry.