Statsguru: How the insurance industry is becoming a two-speed sector

The insurance industry is becoming a two-speed sector. Public-sector companies are growing significantly slower than the private-sector ones, and this may well have implications for the sector’s overall penetration.

Insurance penetration is the value of the premiums relative to gross domestic product. Life insurance penetration declined in 2022-23 (FY23), dropping 20 basis points from the previous year to end at 3 per cent, showed data from the recently released annual report of the Insurance Regulatory and Development Authority of India. It remained at 1 per cent for the non-life sector (chart 1).

This means fewer people with insurance coverage, and more so in the case of women. Only around a third of life insurance policies covered women in 2022-23 (chart 2).

 

Public-sector life insurance premiums grew at 10.9 per cent in 2022-23. But that for the private-sector grew at 16.34 per cent. Average growth over the last five years has been twice as fast for the private-sector (chart 3).

The same story has played out in the non-life segment. The private-sector has grown over three times as fast as the public-sector in terms of premiums collected by general and health insurance companies. The overall non-life space retains a double-digit growth pace while the public-sector companies have lagged with largely single-digit growth in the last five years (chart 4).

Public-sector insurers performed better in settling claims. The latest data shows that the private sector is slowly closing this gap. The gap between the two has dropped from 1.15 percentage points before the pandemic to 50 basis points in 2022-23 (chart 5).

Brokers and intermediaries are raking it in. Both life and non-life players’ commission payouts grew in double digits (chart 6).