IRDAI annual report: India’s insurance penetration dips from 4% to 3.7% in 2023-24

India's insurance penetration dips again in 2023-24, despite efforts to expand the reach

Insurance penetration in the country slowed down from 4 percent in 2022-23 to 3.7 percent in FY24, despite a strong push from the sector regulator to get the entire 1.4-billion population under cover by the time India turns 100.

The Insurance Regulatory and Development Authority of India (IRDAI) has urged all cover companies to work towards 'Insurance for All' by 2047 and expand the reach of insurance across the country, according to the regulator's annual report for 2023-24.

Decline in life insurance penetration

Insurance penetration is one of the key indicators to the spread of insurance in a country. In 2022-23, too, it had declined to 4 percent from 4.2 percent in the previous year.

In 2023-24, the shrink was caused primarily by a dip in life insurance penetration from 3 percent in 2022-23 to 2.8 percent in 2023-24, while the pace of growth for non-life covers remained steady at 1 percent in this period.

Also read: What is insurance penetration?

Improvement in insurance density

India’s insurance density, however, recorded a slight uptick from $92 in financial year 2022-23 to $95 in 2023-24.

Insurance density is another key metric used to assess the level of development of the insurance sector and its reach in a country. “Insurance penetration is measured as the percentage of insurance premiums to GDP, insurance density is calculated as the ratio of premium to population (per capita premium),” the annual report said.

The density of non-life insurance increased from $22 to $25, while life insurance density remained unchanged at $70. “This upward trend in insurance density has been consistent since 2016-17,” the IRDAI said.

Also read: Bima Vistaar: How this all-in-one insurance policy can offer you multi-risk coverage

India and the rest of the world

In contrast to the limited reach of insurance in India, insurance penetration across the world was 7 percent in 2023, including both life and non-life. While the penetration was estimated to be 2.9 percent in the life cover space, it was 4.1 percent in the case of the non-life covers. The insurance density in the world was $889 in 2023.

In developed economies such as the US, South Korea and the UK, the insurance penetration was as high as 11.9 percent, 11 percent and 9.7 percent, respectively, in 2023. South Africa, too, logged insurance penetration of 11.5 percent.