The Economic Survey of India 2018, presented by the government during the budget session of parliament mentioned that the insurance penetration in the country has risen to 3.49% in 2016-17 from 2.71% in 2001. The life insurance penetration was 2.72% while general insurance penetration was 0.77%.
However, comparing with global insurance penetration rate of 6.28%, this still needs improvement. Some of the emerging economies of Asia, such as Malaysia (4.77%), Thailand (5.42%) and China (4.77%) have higher insurance penetration than India.
"Insurance, being an integral part of the financial sector, should be assessed on the basis of two parameters, viz., insurance penetration and insurance density, which is the ratio of premium underwritten in a given year to the total population," said the survey.
The insurance density of India also increased to $3841 from $740 in 2001. The comparative figures for Malaysia ($29081) Thailand ($20781) and China ($21682) were also higher than India.
Life insurance premium grew by 14% to ₹4.18 lakh crore in India whereas non-life insurance premium for crops, motor and health showed a steep growth of 33% to ₹1.30 lakh crore. However, there has been a dip in savings through insurance in the last five years.
"There was a significant decline in the proportion of deployment of financial savings in bank deposits and life insurance funds and an increase in share of currency, provident and pension funds, claims on government (primarily in small savings) in 2015-16. Bank deposits accounted for about 50% of the aggregate financial savings between 2011-12 and 2015-16." said the survey.
*Source: Times of India
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