Data published by the Insurance Regulatory and Development Authority of India indicates that while the total number of life insurance policies has seen a fluctuating trend in the last few years, the number of lives covered under group schemes has significantly increased.
The emphasis placed by individuals on financial security and economic independence throughout life requires no explanation. In the fast-paced modern world, most people’s daily endeavours revolve around ensuring their own and their loved ones’ financial stability at various stages of life. In line with this, the practice of securing oneself economically through life or non-life insurance has gained global traction, including in India.
In one of Factly’s previous articles, we analysed the surge in life and health insurance policies during the COVID-19 pandemic. In this story, we look at decade-long trends in the growth of various types of life insurance.
Methodology and Notes
- The data is sourced from Dataful, that has compiled and made the datasets of life and non-life insurance data published monthly by Insurance Regulatory and Development Authority of India (IRDAI).
- Within IRDAI’s Raw Data, there were negative numerical values for certain months, which were excluded from the analysis discussed in the story.
Insurance uptake on the rise in India
As per IRDAI, India ranked 10th for Life Insurance (LI) and 15th for Non-Life Insurance (NLI) globally in 2019. Compared to 2018, LI premiums increased by 9.6% and NLI insurance premiums by 7.9%, whereas global premiums rose by 1.1% and 3.3% respectively during the same period.
The upward trajectory of insurance is also evident in insurance penetration and density. Insurance penetration, indicating the percentage of insurance premiums to GDP, rose from 2.7% in 2001 to 3.7% in 2019, while insurance density, representing the premium-to-population ratio (per capita premium), increased from $11.5 to $78 during the same period. These figures underscore the increasing trend in both LI and NLI in India.
Notably, these statistics highlight the Indian preference for life insurance over non-life insurance. As per the data, as of 2019, the global share of LIs and NLIs stood at 46.34% and 53.66%, respectively. In contrast, in India, their respective shares were 74.64% and 25.06%.
Data shows increase in Most parameters of Life Insurance
The LI data published by IRDAI includes various parameters such as the number of policies or schemes issued by insurance companies, including the first-year premium polices, the coverage of lives under group insurance schemes, and the overall sum assured. An analysis of this data spanning a decade reveals a consistent increase across all these parameters.
The data presents a notable upward trend across various parameters of life insurance from the fiscal year 2014-15 to 2023-24 (as of February 2024). Over this period, both the number of policies purchased, and individuals covered under group schemes have increased substantially, from 95 lakhs to 2.4 crores and 3.5 crores to 26.7 crores, respectively. Additionally, there was a significant increase in the total amount collected under first-year premiums from Rs. 41,421 crores to Rs. 3,17,745 crores during this period, because of the increase in total number of policies. Furthermore, the total sum assured under life insurance policies witnessed significant growth, soaring from Rs. 25,92,284 crores to Rs. 78,50,135 crores, marking a 202% increase from the fiscal year 2019-20 to 2023-24. These figures collectively underscore a consistent upward momentum across all parameters of life insurance.
However, when analysed annually, the number of policies bought has shown fluctuating trends. Total purchases peaked at 3 crores during 2017-18, decreased to 2.9 crores in 2021-22, and further declined to 2.3 crores in 2022-23. The factors driving these fluctuations require further examination.
Number of People Covered under Group Schemes Witnesses Steep Increase
Data also indicates a significant spike in the number of individuals covered under group insurance. This figure surged from 6.9 crores in 2016-17 to 21 crores in 2017-18, marking more than a 200% increase from the previous year. This upward trend continued, reaching a total of 26.7 crores by 2023-24. This sudden rise could be attributed to the implementation of life insurance scheme tied to Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). According to official data sources, the number of beneficiaries under the PMJDY and PMJJBY schemes increased from 2.9 crores to 3.1 crores and from 14.5 crores to 21.4 crores, respectively, between 2015-16 and 2016-17. These could be the reasons for significant increase in the number of individuals covered under group schemes starting 2017-18.
Moreover, the total enrolment under PMJJBY as of 2023-24 stands at 16 crores, a significant increase from 2.9 crores in 2015-16. On the other hand, the total number of people covered under life insurance as of 2023-24 is 26.7 crores, of which the number of enrolments under PMJJBY alone accounts for about 16 crores.
Number of Individual Policies reduce in the last few years
The life insurance policies bought are of Single and Non-Single Payment options, available for both Individual and Group insurance. Single premium involves a one-time payment, whereas non-single payment allows premiums to be paid in instalments, such as yearly or quarterly. Additionally, the IRDAI also publishes data on the number of policies which are bought under Group Yearly Renewable Premium.
Analysis of this data reveals that from 2014-15 to 2023-24, over 93% of purchased policies fall under Individual Non-single payment. Individual single payment policies, accounting for a share ranging between 4 to 6% over the same period. Group policies, including group yearly renewable premium, make up less than 1% of the total policies purchased.
On the other hand, in terms of the sum assured, group policies accounted for a larger share as expected. From 2018-19, the share of Group’s Yearly Renewable, Single, and Non-single in the sum assured ranged from 38% to 46%, 21% to 23%, and 1% to 3%, respectively of the total sum assured across all life insurance policies. Together, their collective share in 2023-24 was 70%.
Within Individual policies, the share of total sum assured under the non-single payment mode fluctuated between 29% to 40% over the years, while the single payment’s share remained below 1% across the same period. In 2023-24, their combined share was approximately 30%.
Public Insurers dominate number of policies while Private ones in Sum Assured under Group Insurance
From the year 2014-15 to 2023-24, a total of 30 companies have provided life insurance services. Among these, only two are public entities, namely Life Insurance Corporation of India (LIC) and State Bank of India (SBI), with the remaining being private companies.
Over these years, the majority of policies, including first-year premium policies, purchased were from these public insurers. From 2014-15 onwards, private companies held a fluctuating share of between 17-23% for the total number of policies and 26-31% for first-year policies, with the rest being issued by public insurers.
Even within the public sector, LIC consistently held a larger share. For instance, in April 2023, LIC held 69% of the total number of policies and 49% of first-year policies bought, while SBI held only 9% and 21%, respectively. The same trend continued across all years, making LIC the preferred choice among the public.
Though the public insurers account for a higher share of life insurance policies, private companies accounted for a majority in terms of lives covered under group and also the sum assured, both crossing 70% share in recent years.
Data of the last 10 years indicates that while there is an increase in insurance penetration, density, and coverage of individuals, along with the sum assured, the coverage is still dismal particularly in rural India. Media reports indicate that only about 8-10% of rural population is covered under a life insurance. Even the IRDAI (Obligations of Insurers to. Rural and Social Sectors) Regulations, 2015 mandate a specific percentage of the business of an insurer from rural areas.
