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Last Updated : Sep 05, 2019 05:33 PM IST | Source:

Indians now pay more for insurance policies, but buy fewer

Bank-led insurers are also struggling to sell new policies

M Saraswathy @maamitalks

Indians are paying more for their insurance policies now, almost twice, in some cases, compared to what they paid just nine years ago.

The higher cost is directly reflected in the increase in the average ticket size of the life insurance products.

But this doesn't mean more policies are being bought. In fact, the actual growth in number of policies has remained flat.


About nine years ago, the average ticket size of a life insurance policy was between Rs 8,000-25,000. Now, it is between Rs 14,000-82,000. In just four months of the current financial year, the ticket-size of life insurance policies has gone up by Rs 2,000. However, the number of new policies has increased by less than a percent.

Insurers are of the view that selling new products has been a pain-point. The first two quarters of a financial year are generally considered slow. However, this year sales have slipped significantly.

Ticket size

“The same numbers are coming in. However, there has been a dip in sentiments further and the number of incremental policies sold compared to last year has seen a drop,” said the head of sales at a bank-led insurance company.

While last year, bank-led insurers had been able to report a rise in policies sold, this year even they are struggling. Banks sell a larger proportion of unit-linked insurance products (Ulip) that have a higher premium.

A rise in new business premiums has been only due to the fact that there was a jump in the number of Ulip policies sold. Policies

This trend has also worried the regulator which has been encouraging insurers to take efforts to sell more policies rather than sell a lesser number of policies with a higher ticket size.

Selling more policies will lead to a direct increase in the level of insurance penetration in the country.

The Swiss Re sigma report released in July 2019 showed that the insurance penetration in India (as a percentage of the country's gross domestic product) was 3.7 percent in FY19 (compared to 3.69 percent in FY18). The world average is 6.09 percent.

Companies are pinning hopes on the fourth quarter for sales revival to boost the sale of insurance policies. Sales are linked to tax incentives provided for the purchase of insurance products.

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First Published on Sep 5, 2019 05:32 pm
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