This interval in insurance coverage presents an opportunity for the insurers. They can expand their access to Tier-II and Tier-III cities and rural areas with low awareness and access.
“Insurance density in India is relatively lower than global standards. New distribution models can provide facility to include at least customers, which have already been covered by government schemes, “The survey states that Prime Minister Jeevan Jean Jyoti Bima Yojana (PMJJBY), Prime Minister Fasal Bima Yojana (PMFBY), and PMFBY, citing schemes like (PMFBY).
Citing the Estimates of the Swiss Ray Institute, the survey said that India’s insurance sector is expected to grow 11.1% and the next five years (2024-2028) is expected to become the fastest growing market between the G20 countries, which is a The extended middle class is supported by factors such as technical advice. , And auxiliary regulatory measures.
“The non-life insurance sector is expected to double its premium-to-GDP (GDP) ratio over the next two decades. However, it will remain below the global average, “the survey presented by Union Finance Minister Nirmala Sitaraman in Parliament said.
Developing emerging risks such as customers’ expectations and climate change and geopolitical uncertainty offers important challenges to insurers. Increase in life expectancy and a growing elderly population also reduces the risks related to longevity and exposes wide pension differences.
In addition, non-financial risks have achieved importance along with traditional financial risks, warrant the need to address and manage the concerns related to missing, claim settlements delayed settlements, AI (artificial intelligence), Cyber security and third party interaction.
“Economic Survey 2024-25 has highlighted India’s important need to address the low insurance entry rate. Causes such as tier -II and -iii cities contribute to low penetration in cities such as strength and lack of flexible payment options. In addition, challenges such as the lack of trust and misinformation prevent consumers from taking advantage of coverage, “Shilpa Arora, co-founder and COO, said the insurance solution.
He said that the increasing examples of natural disasters and the increasing prevalence of chronic diseases in all age groups for coverage at cheaper rates. The insurers should focus on the offering of products analogous to create public awareness and address this difference.
“While financial inclusion is usually increasing, the insurance sector will require a tailor approach to target Tier II and III cities. It becomes important given global interest in the region, the arrival and ability of foreign investment and ability Increased more liberalization by regulators, “Moin Laddha, Partner, Khetan & Company said.
The data from the Insurance Regulatory and Development Authority of India (IRDAI) showed that 200,000 complaints were filed against the insurers in 2022-23. Among complaints against life insurance companies, 50% were about insurers engaged in missing, while 66% of the complaints against non-life insurers were related to claim or refusal.
The survey said that a clear and quantitative understanding of risk appetite is essential for effective risk management and simplification from insurers, ensuring efficiency and productivity through rapid innovation, ensuring efficiency and productivity through rapid innovation Urged to develop strong capabilities for.
“AI application in healthcare, health insurance and education will be greatly benefited by high degrees of transparency and accountability, as these areas are more human-focused than others. The models being applied in these areas may have adverse, unexpected results, “the survey states.
Insurance growth trend
India’s insurance market has continued the project, increasing the total insurance premium by 7.7% in 2023-24. 11.2 trillion. In 2023-24 in 2023-24, 2022-23 saw a slight increase from $ 92 to $ 95, maintained the increasing trend seen since 20216–17. According to the survey, the life insurance density corresponded to $ 70, while the non-life insurance density increased from $ 22 to $ 25.
Life insurance industry recorded a premium income 8.3 trillion, 6.1%on the year. The renewal premium was 54.4% of the total premium received by life insurers in the premium, and the new businesses contributed the remaining 45.6%. Life insured paid benefits 5.8 trillions in 2023-24, of which 42,284 crore was due to claims of death.
The report said that there has been a noticeable change within the life insurance for security and guaranteed returns saving products, which now covers 40% of homes, which is largely caused by the Life Insurance Corporation of India’s comprehensive network. Is.
On the other hand, the gross direct premium of non-life insurers increased by 7.7% on the year 2.9 trillion in 2023–24, mainly led by health and motor segments. Non-life stood on the claims made by the insurers 1.72 trillion for 2023-24.
Despite this, in 2022-23, 4% to 4% decreased slightly to 3.7% in 2023-24. Within this, the penetration of life insurance from 3% in 2022–23 declined from 3% to 2.8% in 2023-24, while non-life insurance entry remained stable at 1%.
Policy assignment
Highlighting the role of government support in the insurance sector, the Economic Survey 2025 called for the establishment of insurance institutions to provide a soft landing for the workers whose finance has been killed and whose goodness is affected during the transition period .
“These institutions help secure the standard of living during shifts, check and help inequalities in keeping social clothes united. They are responsible for reducing the risk of recession, for individuals and also for societies, “said this.
It states that such institutions help to create security nets (The National Insurance Act, 1911, and Beverridge Report, 1942, UK), workers protect rights and provide finance (eg credits unions) , Provide housing (Association during the Youth Men’s Christian Association), 19th century), and social and emotional support during the displacement period.
The survey suggested addressing issues related to systemic liquidity, such as entry costs, information disparity, and creating a strong secondary corporate bond market. This includes obstacles such as insurance and pension funds, which are not allowed to invest in lower rated bonds than ‘AA’, which mobilize small players in the corporate bond market.
“Liquidity is also bottled through rules that prevent future money from investing in corporate bonds for more than three years. In addition, insurance funds are not allowed to invest in loans issued by private companies, “the survey states.
foreign capital
The International Financial Services Center (IFSC) Gift City includes 37 institutions in the insurance ecosystem, including 15 IFSC IIINSURANCE Office (IIOS) and 23 IFSC Insurance Middle Office (IIIOS). The total (RE) insurance premium booked by IIOS was $ 427 million, and (re) IIIIS insurance premium was $ 1,036 million until September 2024.
Insurance services received the highest foreign direct investment (FDI) of over 62% in all service sectors, followed by the financial services sector, which received more than 18% of the total FDI equity flow in the service sector.
To increase the FDI limit in the insurance sector amid the call of insurance players, the current 74% to 100% call to encourage more foreign capital in the sector, improve capital access to the sector, foster innovation and competition , And global standard and best practices to introduce.
Government schemes
The government provides insurance to farmers.
The scheme has recently launched several technical intervention such as Yes-Tech, Winds and Cropic 28. There has been an increase in transparency by reducing human intervention and promoting maximum confidence among stakeholders, implementing states/UTS and insurance companies. The number of states contributed to 24 in 2024-25 in 2020-21 increased to 24 and the number of insurers increased from 11 to 15.
These progress has reduced premium rates by 32% compared to previous years. As a result, in 2023-24, the number of enrolled farmers reached 40 million, 2022-23 increased from 31.7 million to 26%. The insured area expanded to 60 million hectares in 2023-24, 202-23 increased by 50 million hectares by 19%. The plan of the scheme and the farmer enrollment figures are at an all -time high.
In addition, there is a share of 5.9% in healthcare financing schemes in government health insurance schemes, of which social insurance schemes such as Employees State Insurance Corporation (ESIC) 98, Central Government Health Scheme (CGHS) 99, and pre-service contribution health Plan (ECHS) is a share of 3.2% in 100.
Ayushman Bharat-Prime Minister’s Jan Arogya Yojana (AB PM-Jai), Presidential Health Bima Yojana (RSBY) and State-specific government health insurance schemes supported by government health insurance schemes, between others, between others, 2.6% stake in healthcare financing schemes Is. ,
