Insurance sector's premium income to double by FY34 to around USD 450 billion: Report

The domestic insurance sector is on course to log in over 7 per cent annual growth over the next decade and the premium income is likely to double to around USD 450 billion by financial year 2033-34, an industry report said on Tuesday.

The total premium income will more than double over the next decade (2024-34) from the present USD 224 billion, and insurance penetration will increase from 3.8 per cent currently to 4.5 per cent by FY34, Swiss Re Institute said in a report.

The report further said over the next five years (2024-28), the total insurance premium income of domestic insurer are likely to grow 7.1 per cent annually in real terms, which is well above the global average growth of 2.4 per cent, 5.1 per cent in emerging markets and 1.7 per cent in advanced markets, the report said.

The more than double of the global average growth of the domestic industry is on the back of a resilient domestic economy which will remain the fastest growing large GDP for the next five years, along with the rising awareness about the need for insurance and the very low penetration now along with the low insurance-to-GDP ratio of 3.3 per cent, which will also increase to 4.5 per cent, the report said.

Growth will continue to be led by life market which currently accounts for about three quarters of total insurance premium income at USD 163 billion and is forecast to grow at an annual average of 6.7 per cent during FY24-28, while non-life premium, including health, is expected to expand by an average of 8.3 per cent from USD 61 billion in FY24, the report said.

The report also flagged the low risk protection citing the rising incidences of natural calamities such as earthquakes, floods, cyclones, drought and wildfires, with regular frequencies and said with an average annual economic loss (loss to insurance companies in terms payout) of USD 8 billion over the past decade. As much as 93 per cent in the country is uninsured, it added.

The report said if the Bhuj quake were to have happened now, the economic loss would have been USD 30-40 billion, as against USD 100 million then (given the larger size of the economy now) and the actual insured loss would have been USD 4 billion, as against USD 4 million then.

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