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India’s Insurance Penetration Declines to 3.7% in FY 2023-24

by Celia

India’s insurance penetration dropped to 3.7% in the fiscal year 2023-24 (FY 23-24), down from 4% in the previous year, according to the Insurance Regulatory and Development Authority of India’s (IRDAI) annual report.

The decline in overall insurance penetration was driven by a drop in life insurance penetration, which decreased from 3% to 2.8%. Meanwhile, non-life insurance penetration remained stable at 1%.

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Despite the decrease in penetration, insurance density, which measures the total premium per capita, showed a slight increase. It rose from $92 in FY 22-23 to $95 in FY 23-24. The increase in density was more pronounced in the non-life insurance segment, where density grew from $22 to $25. However, life insurance density remained unchanged at $70.

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This marks a continued upward trend in insurance density, which has been observed since 2016-17, reflecting gradual but steady growth in the industry.

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In terms of premium income, the life insurance sector saw a growth of 6.06%, with total premium income reaching ₹8.30 lakh crore in FY 23-24. The non-life insurance sector also experienced a significant rise, with a 12.76% increase in direct premiums, totaling ₹2.90 lakh crore.

While insurance penetration faced a slight setback, the overall growth in insurance density and premium income points to continued expansion in both life and non-life insurance sectors in India.

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