Life insurance coverage in percentage terms in India has slipped to the level it was 15 years ago to about half the global average, according to a recent Swiss Re report, which said this will rise as government initiatives take effect and economic growth gathers pace.

“Insurance penetration in India remained low at 3.44% in 2015 compared to the global average of 6.23%, reflecting large untapped potential”, said Swiss Re. “Robust economic growth and government enabling policy actions and initiatives are expected to increase insurance penetration and will act as a catalyst for future growth of the industry”, it added.

Life insurance coverage peaked to 4.6% in 2009, after which it started sliding and was at 2.6% in 2014. The reason for this: changes in product norms and in commission structures.

After private companies were allowed to enter the life insurance business in 2000, penetration had risen consistently to 4.6% in 2009 from 2.15% in 2001.

The drop in sales of unit-linked insurance plans (Ulips), a combination of investment and insurance and among the most popular products until 2010, was a primary reason for the decline in persistency.

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