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Posted 10 Dec 2024

2 min read

Status of Insurance Sector in India:

  • Insurance penetration: Insurance penetration increased from 2.71% in 2001-02 to 4.2% in 2021-22. 
    • The global average was 7% in 2021-22. 
  • Insurance density: Insurance density has increased from $11.5 in 2001-02 to $91 in 2021-22. 
    • The global average was $874 in 2021-22.
  • Insurance business: India ranked 9th in life insurance business with a market share of 3.23% in 2021. 

Key Issues of Insurance Sector in India: 

  • Missing Middle: Around 30% of population is devoid of health insurance(NITI Aayog).
  • Level Playing Field for Public Sector Companies: They lack adequate capital and have lagging insolvency ratios.
  • Absence of Policy Roadmap: There is no Policy Roadmap for achieving envisaged ambitious target of Insurance for All by 2047

Recommendations: 

  • Development of new affordable micro insurance products for financial protection of vulnerable sections.
  • Bringing uniformity in TDS on GST applicable to insurance provided by both Public and Private Sector Insurance Companies.
  • Allow composite licensing, enabling a single insurance entity to offer both life and non-life insurance products.
  • Rationalize the GST rate on insurance products, especially health and term insurance, which is 18% at present.

Steps taken for Development of Insurance sector

  • Insurance Regulatory and Development Authority of India (IRDAI): To ensure orderly growth of the insurance business 
  • Insurance Act 1938: It provides legislative framework for functioning of insurance businesses
  • New Schemes: Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jan Arogya Yojana (PM-JAY), Pradhan Mantri Fasal Bima Yojana (PMFBY) etc.
  • Tags :
  • Insurance Sector
  • Standing committee on Finance
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