Insurance Sector in India: The business of life insurance was affected during the financial years 2020-21 and 2021-22 due to the Corona epidemic.
SBI’s research team has prepared a report on the insurance industry during the pandemic, according to which women bought one policy in every three in the financial year 2020-21, out of which the country’s largest insurance company LIC sold the maximum number of policies.
In the current financial year 2021-22 till February, the premium for new life insurance policies increased by about 8.4 per cent on an annual basis and insurance companies received premium of Rs 2.54 lakh crore.
There are several special points in the SBI Ecowrap report regarding the condition of the insurance industry during the pandemic, which are worth noting. Apart from this, suggestions have also been made regarding the strength of the insurance sector, such as it has been suggested to link MNREGA workers with universal insurance schemes.
Increased sales of health insurance policies
Due to the epidemic, more and more people became aware about health insurance policies. Apart from this, he also felt the need for adequate coverage. Due to this, a large number of people bought new policies or shifted to such insurance companies which give more coverage and have better claim settlement.
According to the report, retail health insurance grew by 28.5 percent year-on-year to Rs 26301 crore in FY 2021. In this financial year also, the situation is looking better and in FY 2022 till January, retail health policy grew by 17.3 per cent and group policy by 30.1 per cent.
Increase in death claims
In the financial year 2021, life insurance companies processed more death claims and it stood at Rs 41958 crore, a growth of 40.8 percent on a yearly basis. In the individual life insurance business, during the financial year 2021, life insurance companies settled 10.84 lakh claims worth 46.4 percent more i.e. Rs 26422 crore.
Insurance companies sold more policies in collaboration with the bank
Despite digitisation, sales of policies through online and web aggregators remained only 1.9 per cent in terms of premium value and only 1.6 per cent in terms of number of policies. In the matter of selling policies, partnership with the bank has been a better channel for insurance companies i.e. Bancassurance.
Through this, insurance companies collected 16.6 per cent premium in FY14, which increased to 29 per cent in FY21, though it was 55 per cent in case of private insurers. In contrast, LIC’s trust remained on individual agents, but their participation is decreasing.
Strengthened by non-life insurance business
The role of non-life insurance business brokers has increased in increasing the business of the insurance sector. Their share in the total premium was 21.9 percent in FY 2014, which increased to 31.4 percent in FY 2021.
Women bought one third life insurance policy
According to the SBI Ecowrap report, women bought about 93 lakh policies in the financial year 2020-21, which is equivalent to about 33 percent of the total policies sold. That is, women bought one policy in every three policies.
In the financial year 2019-20, this figure was 32.23 percent. Women expressed maximum trust in LIC. 35 percent of women bought policies from LIC, while 27 percent of policies were purchased from private life insurance companies.
With the help of the government, there can be a boom in the insurance sector
Between FY 2001 and FY 2009, the insurance sector in India grew from 2.71 per cent to 5.20 per cent due to liberalisation, but after that it slipped to 3.30 per cent in FY14. However, after this, due to government support and universal insurance schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana,
Pradhan Mantri Suraksha Bima Yojana, the insurance sector again boomed in FY 2015 and reached 4.20 percent in FY 2021. In the SBI Ecowrap report, three suggestions have been given to the government so that this sector can grow rapidly.
- through MNREGA. The government can compulsorily enroll MNREGA workers in Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana, whose premium will be paid by the government. The premium of Pradhan Mantri Jeevan Jyoti Bima Yojana is Rs 342 and that of Pradhan Mantri Suraksha Bima Yojana is Rs 12.
- The 18 per cent GST on insurance policies needs to be considered once. SBI Ecowrap report suggests reducing it.
- For various sectors, the government should bring some standard products so that the protection gap can be increased in all the segments. It can be understood that in the year 2020, there was a loss of Rs 52500 crore due to floods in India but the insurance was only 11 percent. Now if the government had done insurance, then the premium for the sum assured of Rs 60 thousand crore would have been Rs 13000-15000 crore and thus the government would have saved at least Rs 40 thousand crore.
