Insurance Protection Deficient in India

Sep 21, 2017

• Previous
• Next

The life insurance industry in India began with, Life Insurance Corporation of India, which remained the sole player during the period 1956 to 2000. After the sector was privatised in 2000, several new players entered the arena. In terms of premium, the last decade witnessed growth at an annual rate of 8%. With 23 players, the life insurance industry in India is valued at Rs 4.2 trillion, based on premium (FY17).

But insurance protection in India remains grossly inadequate. This explains the huge protection gap of US$ 8.5 trillion for the country as of 2014. As per a Swiss Re report, India's protection gap stood at a staggering 92% and was the highest among all countries in the Asia Pacific. What this means is that for US$ 100 of insurance protection required, the country had insurance protection of a mere US$ 8 as of 2014. This is abysmally inadequate with a large part of the population still bereft of protection coverage.

Undoubtedly, the life insurance sector has huge potential for growth. Additionally, factors such as increasing youth population, rapid urbanisation, expanding financial literacy, and higher government focus on financial inclusion and risk coverage will spur demand further for insurance products in the country.

Therefore, with the stock markets buzzing, insurance companies are also making a beeline to capitalise on the IPO frenzy. After ICICI Prudential got listed last year, a number of both life and non-life insurance companies have lined up their IPOs this year.

Speaking of IPOs, SBI Life Insurance Company's initial public offering opened yesterday. It is among the first life insurance companies to commence operation in 2001 and is the market leader among private sector players in terms of new business premium. Is the IPO worth considering? Does the company have strong fundamentals? What about valuations and growth potential? Equitymaster Insider Ankit Shah has the answers.

To know more, get on the Insider list now.

Data Source: Swiss Re, Crisil Research

This Chart Of The Day was published in The 5 Minute WrapUp - In Just 5 Minutes: Timely Ideas to Build Timeless Wealth

Claim settlement ratio of insurance companies

This chart shows claim settlement ratio of life insurance companies... Read On

India ranks high on HDI improvement

This chart shows the top 5 countries in terms of improvement in HDI over past 2 decades... Read On

Persistency rate of insurance policies

This chart shows the persistency rate of insurance policies.... Read On

The top 10 year multibagger stocks

The chart shows the top 20 multibagger stocks over the past decade.... Read On

Ten Year Sensex PE

Market Indices are touching a record high. Time to tread cautiously.... Read On