IRDAI annual report 2022-23: Marginal dips recorded in insurance penetration, female policyholders' share

Life insurance claim settlement ratio saw a marginal dip in 2022-23

The share of life insurance policies sold to women in India slightly decreased from 34.7 percent in 2021-22 to 34.2 percent in 2022-23, according to a study conducted by the Insurance Regulatory and Development Authority of India (IRDAI).

In the fiscal year 2022-23, the number of life insurance policies issued to women reached 97.38 lakh, out of a total of 2.84 crore policies sold.

The IRDAI study considered only the individual new business data – number of policies and first year premium for the year 2022-23 - for the purpose. Share of policies sold to women by the Life Insurance Corporation of India (LIC) was higher at 35.81 percent, compared to private life insurers’ 30.13 percent.

Karnataka (44.23 percent), Kerala (43.96 percent), Mizoram (42.97 percent), Sikkim (42.6 percent), and Meghalaya (41.81 percent) emerged as the top states in terms of the share of life insurance policies issued to women. On the other hand, Ladakh (23.1 percent), Haryana (27.16 percent), Jammu & Kashmir (28.07 percent), Uttar Pradesh (29.53 percent), and Gujarat (29.59 percent) were among the states with lower percentages.

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Life insurance claim settlement ratio sees marginal dip          

In terms of the number of life insurance policies, the claim settlement ratio slightly decreased in 2022-23 to 98.45 percent, compared to 98.64 percent in 2021-22. Both the LIC and its private sector counterparts reported lower claim settlement ratios of 98.52 percent (compared to 98.84 percent in 2021-22) and 98.02 percent (compared to 98.11 percent in 2021-22), respectively.

In the health insurance sector, general and health insurance companies settled 85.66 percent of claims by policy count in 2022-23. However, in terms of the amount paid, this figure was significantly lower at 71.62 percent. This suggests partial settlement of hospitalization bills, a common grievance among policyholders. Insurers often attribute this to inflated hospital costs, leading to unreasonable treatment expenses, while hospitals claim that insurance companies are unwilling to fulfill their commitment to reimburse the bills.

According to the IRDAI annual report, during 2022-23, general and health insurers settled 2.36 crore health insurance claims, with the payouts amounting to Rs 70,930 crore. The average amount paid per claim was Rs 30,087. Out of this, 56 percent of the claims were settled through cashless mode, while another 42 percent were paid out through the reimbursement mode.

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Insurance penetration stagnant

While the IRDAI has announced its ambitious goal of ensuring ‘Insurance for All’ by 2047, the life insurance penetration dropped marginally from 3.2 percent in 2021-22 to 3 percent in 2022-23. Non-life insurance penetration did not grow either as it remained unchanged 1 percent. “As such, India's overall insurance penetration reduced to 4 per cent in 2022-23 from the level of 4.2 per cent in 2021-22,” IRDAI said in its annual report.

Insurance penetration is measured as a percentage of total premiums collected to the country’s Gross Domestic Product (GDP). It is one of the parameters used to assess the level of development of the insurance sector in a country. In developed countries such as the US and Canada, it is over 11 percent.

However, the other parameter used for the purpose – insurance density – fared better. It is the ratio of premiums collected by insurance companies to the country’s population. Expressed typically in dollar terms, it represents the per capita premium.

In 2022-23, the life insurance density increased to $70 from $69 in 2021-22, while the non-life insurance density remained the same. The overall insurance density rose from $91 in 2021-22 to $92 in 2022-23.