General insurance market below potential in India

The penetration of general insurance in the country continues to remain low despite the industry recording an impressive growth of 16 per cent during the five-year period ending March 2009, a study said.

"India ranks 136th on penetration levels and lags behind China (106), Thailand (87), Russia (86), Brazil (85), Japan (61) and the US (9)," the joint study by CRISIL and Assocham said.

It attributed the low general insurance penetration level at 0.60 per cent of the GDP as against the world average of 2.14 per cent to "low consumer preference, largely untapped rural markets and constrained distribution channels".

"While life insurance players are struggling with the quality of insurance advisors, general insurance players face difficulty in getting intermediaries to distribute their products," Assocham President Sajjan Jindal said.

While not being able to get intermediaries has limited the access, the commission rates and ticket size of general insurance are extremely low as compared to life insurance, the study added.

The average ticket size of a life insurance product is around Rs 20,000 while that of a general insurance policy is at around Rs 5,000, the study said. Also, the commission rates for general insurance is at around 10-15 per cent compared to 35-40 per cent in the life insurance.