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.