The Protection Gap-difference between insured losses and economic losses, or uninsured losses, in the country is between 70-80 per cent and insurance companies need to exploit the situation, Insurance Regulatory and Development Authority of India Chairman, Subhash Chandra Khuntia said here Friday.
"The overall Protection Gap in this country, whether it is life or general (non-life), in most of the segments the protection gap is about 70 to 80 per cent. Only 20 to 25 per cent is being availed. There is a huge gap," he said.
"With the growth in the economy more and more young people coming into the workforce. I think the need for insurance will go up manifold in the next few years. This can be exploited by our insurance companies," Khuntia added.
He was speaking at the inaugural session of the three-day international conference on "Insurance Law and regulations: Global Practices" organised by ICFAI Law School in association with the University of Newcastle, Australia.
According to a Lloyd's of London's recent report, India has the second largest insurance gap in the world of $27 billion (in absolute terms) after China, where the under-insurance or insurance gap is over $76 billion.
The IRDAI chief said insurance penetration in the country is about 3.7 per cent of the GDP as against the world average which is 6.31 per cent.
"The life insurance sector in India is growing at 11 to 12 per cent. If you look at general insurance it is growing 18 per cent per annum. Standalone health insurance the average growth rate is 35 per cent per annum," Khuntia said.
He opined the health insurance sector is likely to witness "manifold" growth with the Pradhan Mantri Ayushman Bharat Jan Arogya Yojana (PMJAY) which covers 40 per cent of the country's population.