The Insurance Regulatory and Development Authority of India (Irdai) has reported a slight decline in the country's overall insurance penetration for the financial year 2023-24. According to Irdai's annual report, insurance penetration stood at 3.7%, a decrease from 4% in the previous fiscal year. The life insurance sector’s penetration fell to 2.8% from 3%, while non-life insurance penetration remained unchanged at 1%.
Insurance penetration is a percentage of a country's total premiums collected compared to its GDP. It's a key indicator of the development of a country's insurance industry.
The non-life insurance industry recorded a marginal improvement in its incurred claims ratio, which stood at 82.52% for FY24, compared to 82.95% in the previous year. During the same period, the industry underwrote a total direct premium of ₹2.90 lakh crore, reflecting a growth of 12.76% from FY23.
Public sector general insurers contributed ₹90,252 crore in premiums, an increase of 8.88% from ₹82,891 crore in the prior year. Meanwhile, private sector insurers, including standalone health insurers, underwrote ₹1.88 lakh crore, up from ₹1.58 lakh crore in FY23.
Profitability in the non-life insurance sector showed notable improvement. The industry reported an aggregate profit of ₹10,119 crore for FY24, a recovery from the net loss of ₹2,566 crore recorded in FY23. This recovery occurred despite a 15.39% rise in net incurred claims, which increased from ₹1.49 lakh crore in FY23 to ₹1.72 lakh crore in FY24.
The incurred claims ratio for public sector general insurers stood at 97.23%, a slight reduction from 99.02% in the previous year. Private sector general insurers posted an incurred claims ratio of 76.49%, up from 75.13%, while standalone health insurers reported a ratio of 63.63%, compared to 61.44% in FY23. Specialised insurers recorded an incurred claims ratio of 66.58%, down from 73.71% in the previous year.
In the life insurance sector, the total benefits paid amounted to ₹5.77 lakh crore in FY24, equating to 70.22% of the net premium. Surrenders and withdrawals increased by 15.29%, reaching ₹2.29 lakh crore, with public sector life insurers accounting for 58.36% of this amount. The life insurance industry reported an overall profit after tax of ₹47,407 crore for FY24, up by 10.79% from ₹42,788 crore in FY23. Public sector life insurers saw an 11.75% increase in profit, while private sector insurers recorded a growth of 5.32%.
As of 31 March 2024, the Indian insurance market comprised 26 life insurers, 25 general insurers, eight standalone health insurers, 12 reinsurers and foreign reinsurance branches, and two specialised insurers.