Insurance sector needs 50000 Crores to double penetration

  • January 21, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Insurance sector needs 50000 Crores to double penetration

Subject: National  Bodies

Concept:

  • The Insurance sector needs to infuse approximately Rs 50,000 crore of capital every year in order to double penetration in the country, Insurance Regulatory and Development Authority of India chairman Debasish Panda said.
  • Panda also asked the insurance companies to come out with more products related to surety bonds where the market is huge.

Insurance Penetration

  • Insurance penetration measures the contribution of insurance premium to the Gross Domestic Product (GDP) of a country in percentage terms.
  • For instance, if a country generates a total insurance premium of say, USD10 billion and that country’s GDP for the same period is USD100 billion, insurance penetration translates to 10% (i.e USD10b/USD100b * 100).

Insurance Density

  • Insurance density, on the other hand, is the ratio of insurance premium to the total population.
  • It gives an indication of how much each of the people in a country spends on insurance in terms of premium.
  • In other words, it is the per capital premium for the country, calculated by dividing the total insurance premium by the population. For example, if the population of the country in the above example is 10 million people, the insurance density (per capital premium) would be USD1,000.

About IRDAI:

  • The Insurance Regulatory and Development Authority of India (IRDAI) is an independent statutory body that was set up under the IRDA Act,1999.
  • It is under the jurisdiction of Ministry of Finance.
  • It is tasked with regulating and licensing the insurance and re-insurance industries in India.
  • Aim: To protect the interests of the insurance policyholders and to develop and regulates the insurance industry. It issues advisories regularly to insurance companies regarding the changes in rules and regulations.
  • The agency’s headquarters are in Hyderabad, Telangana, where it moved from Delhi in 2001.
  • Composition: IRDAI is a 10-member body including the chairman, five full-time and four part-time members appointed by the government of India.
Insurance sector needs 50000 Crores to double penetration National Bodies