Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24 on July 22. Following the presentation, Chief Economic Adviser Dr. V. Anantha Nageswaran held a press conference to address media queries regarding the survey.
The survey highlighted that India is poised to emerge as one of the fastest-growing insurance markets in the coming decade as the insurance penetration in India moderated slightly to 4 per cent in FY23, from 4.2 per cent in FY22.
As per the Swiss Re Institute Report, Life premium growth in India is estimated to slow to 4.1 per cent in FY23 (higher than the historical average of 3.2 per cent during 20122021) from 5.9 per cent in FY22 as memories (i.e., risk awareness) of the pandemic faded and a recent change in tax norms for high-ticket policies weighed on new premium growth. Owing to these factors, new business premiums, after growing by 40 per cent in the first quarter of FY22, contracted in the fourth quarter (7 per cent). The momentum continued in FY23 as well, with new business premiums in the second quarter declining by 21.2 per cent, mainly due to a contraction in the group insurance business.
As per the report the Non-life premium growth moderated slightly from 9 per cent in FY22 to an estimated 7.7 per cent in FY23 ( lower than the historical average of 8 per cent during 2012-2021 ) as the market stabilised after the pandemic. Growth in almost all lines of business slowed last year as the industry stabilised after the pandemic
The survey report also pointed out the impact on agriculture insurance. The agriculture insurance is estimated to register a flat growth in FY23 due to a sharp decline in premium rates in the Kharif cropping season. The decline was more than offset by increased insured land area and farmer enrolments during the season. Agriculture premiums will likely rise from 2024 onwards, with an average real premium growth of 2.5 per cent over the medium term, supported by improvements in insurance infrastructure such as mobile applications and remote sensing for crop loss monitoring.
As per the Swiss-Re Institute January 2024 report, over the next five years (2024-28), total insurance premiums in India will grow by 7.1 per cent in real terms, well above the global (2.4 per cent), emerging economies (5.1 per cent) and advanced economies (1.7 per cent) market averages.
At this rate, India will have the fastest-growing insurance sector amongst the G20 countries. Insurance penetration as a per cent of GDP is projected to grow from 3.8 per cent in FY23 to 4.3 per cent by FY35.
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