India’s insurance penetration well below global average, says IRDAI Chairman

India’s insurance penetration is well below the global average and insurers should expand beyond bigger cities to address this issue, said Subhash Chandra Khuntia, chairman of the Insurance Regulatory and Development Authority of India (IRDAI).
“The total premium that we collect is only 3.76% of GDP (gross domestic product). The world average insurance penetration is a little higher than 7%,” Khuntia said , while addressing a conference hosted by the Federation of Indian Chambers of Commerce and Industry.
To improve this figure, Khuntia urged insurers to design micro insurance products to cater to rural and tier two, three and four cities, anticipating demand as Covid-19 spreads through the hinterland.
The IRDAI also suggested that insurers consider job and income loss policies and focus on group insurance policies for small and medium enterprises keeping in mind the migrant workers who would be returning to work.
“These opportunities we are losing because we are too conservative,” said Khuntia.
About 1.5 million lives had been insured within a month under the two Covid-19 specific insurance policies, Corona Kavach and Corona Rakshak, according to Khuntia.
“More than 15 lakh lives have already been covered under these two products within a month. That shows what is the demand and it is important that we cater to this demand,” he said.
The regulator was compelled to come out with the standardised Covid-19 policies after seeing no such initiative from the industry, Khuntia said, adding that some insurers felt these products were competing with their own policies.