A joint study conducted by Assocham-CRISIL states that the government should implement an index based on the insurance penetration and regard it as a measure of financial and social progress. Also, use of such a parameter can help in obtaining a more holistic view of the extent of the financial under-penetration. The relevant industries and policymakers can benefit from this index and reach out to potential markets.
Due to limited financial awareness and literacy among the masses, India registered an insurance penetration of 3.9% (2013-2014), which was low in comparison with the world average of 6.3%. Also, India is lacking behind in the sector of advanced economics on insurance density, which is a ratio of premium to total population.
According to the study, distribution is the pivotal element in improving insurance penetration. The distributors play a key role in educating and advising clients regarding investments on various products. In addition, the number of female policyholders is important in understanding whether the insurance and financial services are accessible to both the genders equally.