The pandemic has increased the potential for health and life insurance in India. According to Swiss Re’s Sigma report on World Insurance, insurance contribution to GDP has risen to 4.2% in FY21 from 3.76% in FY20. Insurance penetration (premium as a percentage of GDP) for both life and non-life insurance has seen an increase during the pandemic.
While life penetration has increased from 2.8% to 3.2%, the non-life play has increased to 1% from 0.94% last year. In non-life, India’s ranking has improved by one place despite premium shrinking in dollar terms. This is because Brazil, which was in 13th place, slipped sharply as its business shrunk 20% in dollar terms.
According to the survey, many feel underinsured, despite most owning medical and life insurance. Between 30% and 40% of the respondents purchased additional life and health insurance during the crisis, and 25-50% still intend to buy new policies. “The intent was higher in emerging Asia (56%), particularly India, Vietnam and China (70%) versus advanced Asia (average: 20%),” Swiss Re said.
The improved prospects for insurance are also reflected in the performance of non-life during the first quarter. Non-life insurers have registered a 14% growth in gross premium during the first quarter as demand for health insurance increased during the deadly second wave of Covid. Non-life companies registered premium collections wroth Rs 44,434 crore in the first quarter of FY22 as compared to Rs 39,054 crore in FY21. The trend has continued in July after the second wave subsided. According to a report by ICICI Securities, health insurance premiums at the industry level in July ’21 grew by a strong 43% year on year and 25% month on month. Fire insurance premium too staged robust 20% year-on-year while motor grew 9% over last year in July.
The increase in insurance penetration bodes well for the government’s disinvestment programme. India ranks 10th in life insurance and 14th in non-life. Despite the insurance market being small relative to GDP, it is seen as having huge potential.