Covid crisis fuelled demand: LIC chief
Life insurance industry recorded a de-growth of 27.92% till May 2020, LIC Chairman tells Bizz Buzz
Mumbai : Phased unlock process in the country, which began way back in June, has helped increase life insurance penetration in the country, says LIC chairman, MR Kumar.
Due to lockdown and related restrictions which impacted the mobility of marketing force, as at the end of May 31, 2020, life insurance industry recorded a de-growth of 27.92 per cent in FYP (first year premium) at Rs 20,466.75 crore as compared to Rs 28395.89 crore and a de-growth of 51.02 per cent in policies (14,24,373 policies as compared to 29,08,093 in the previous year).
However, as phased unlock process started from June resulting in increased economic activities, our industry adopted innovative digital business processes in meeting the expectation of the market and as on November 30th, the life insurers clocked a FYP of Rs 1,66,6,62.96 crore as compared to Rs 16,92,51.19 crore. The de-growth was brought down to 1.53 per cent.
"It is a matter of fact that the pandemic has made people aware of the importance of life insurance and it may be the inflexion point for life insurance becoming a nudge product from a push product which will ultimately benefit the population," said LIC chairman M R Kumar, while talking to Bizz Buzz on the sidelines of CD Deshmukh Memorial Seminar, National Insurance Academy (NIA), Pune this morning. Meanwhile, the LIC Chairman has given a call for having new metrics of evaluating the life insurance penetration in the country.
"It is time I think that for India we start building our own metrics of evaluating the penetration of Life Insurance, without going by the metrics used worldwide. We need to think differently on this issue," he said. India is an under-insured country and we are a nation of under-insured people. In a country of 1.38 billion people, approximately only 20 per cent of the total insurable population of India is covered under some or the other form of insurance.
The penetration of life insurance stood at 2.82 per cent in FY2019, which marginally increased from the level of 2.74 per cent in FY2018. Save for the years between 2006 and 2010, life insurance penetration in India has remained between 2 per cent and 3 per cent. It had touched a high of 4.6 per cent in 2009, which was the year when India crossed the world average of the then 4 per cent life insurance penetration.
For the last one decade now, India's life insurance penetration has remained below the world average. As of fiscal year 2019, the life insurance density in India was $58. Similar to the insurance penetration in India, the density also surged until fiscal year 2010, after which it saw a gradual decline.
The numbers inched up again around fiscal year 2017 indicating resurgence in the insurance density. The "mortality protection gap as a percentage of protection need" depicts the level of vulnerability of individual households. This ratio is highest in India, at 82.7 per cent, followed by China, Indonesia, Thailand and Malaysia at around 70 per cent to 75 per cent.