Life Insurance Penetration Falls in 2010-11

The Minister of the state for finance said that the country’s life insurance penetration has dropped in financial year 2010-11, while non-life insurance penetration rose marginally. The Minister said that the life insurance penetration has dropped to 4.4 in 2010-11 from 4.6 in 2009-10 whereas non-life insurance penetration has increased to 0.71 in 2010-11 from 0.6 in 2009-10.

Certain macro-economic factors like growth, inflation, interest rates, returns of most competing financial products offered by mutual funds and banks and small savings returns impact the penetration of insurance in the country. However, the total insurance penetration has increased from 2.32 in 2000-01 to 5.10 in 2010-11.

Recently, the Insurance Regulatory and Development Authority (IRDA) introduced a website under the name “Bima Bemisaal” in order to improve awareness among the people about insurance policies.

The minister said that 4,71,068 life insurance agents were terminated in the first three quarters of 2011-12 (Apr-Dec), due to various reasons. Leading insurance company LIC has terminated 1,95,326 agents during that period and added 2,04,554 agents.

A recent study by IRDA shows that one out of 4 people do not think that life insurance is important, this made the insurance regulatory to come up with an effective marketing strategy to increase insurance penetration.