India's insurance penetration declines for second consecutive fiscal year

India's insurance coverage decreased in the fiscal year 2024 (FY24), marking the second consecutive year of decline. The Insurance Regulatory and Development Authority of India (IRDAI) annual report, released Monday, shows penetration, the ratio of annual premiums to GDP, fell to 3.7% in FY24 from 4% in FY23. This follows a peak of 4.2% during the Covid period.

Life insurance penetration saw a slight drop to 2.8% in FY24, compared to 3% the previous year. Non-life insurance penetration held steady at 1%. Despite the decline in overall penetration, the per capita premium (insurance density) rose slightly from $92 in FY22 to $95 in FY23. This contrasts with the global trend, which saw increased insurance penetration. The global average reached 7% in 2023, up from 6.8% in 2022.

The life insurance industry's premium income reached ₹8.3 lakh crore in FY24, a 6.1% increase, slower than GDP growth. Private sector life insurers saw premiums grow by 15.1%, while the public sector grew by only 0.2%. Benefit payouts totaled ₹5.8 lakh crore, representing 70.2% of net premiums. Surrenders and withdrawals increased by 15.3% to ₹2.3 lakh crore, with public sector life insurers accounting for 58.4% of that amount.


The non-life insurance sector collected ₹2.9 lakh crore in direct premiums, a 12.8% rise. This growth was primarily driven by increased health and motor insurance premiums from individuals. General and health insurers settled 2.7 crore health insurance claims, paying out ₹83,493 crore. Excluding health insurance, general insurers paid out ₹1,01,050 crore in claims. Private general insurers paid 55% (₹55,524 crore), public sector insurers paid 32% (₹32,131 crore), and specialized insurers paid 13% (₹13,396 crore).

Total industry investments reached ₹67.6 lakh crore as of March 31, 2024, up 12.6% from ₹60 lakh crore the previous year. Life insurers accounted for 91.1% of these investments, general insurers (including specialized and standalone health insurers) for 7%, and reinsurers (including foreign branches) for 1.9%. Public sector entities held 69.5% of investments, while the private sector held 30.5%.

(with ToI inputs)