Economy Survey 2025: Insurance coverage lower than global average, notable gaps

livemint.com:

Subscribe to enjoy similar stories. MUMBAI : India's insurance penetration at 3.7% is much lower than the global average of 7%, and there is a “notable gap" in the country's insurance coverage, said the Economic Survey 2024-25 on Friday. This lag in insurance coverage presents opportunities for insurers.

They can expand their reach in tier-II and tier-III cities and rural areas with low awareness and accessibility. “Insurance density in India is relatively low compared to global standards. Innovative distribution models can facilitate the inclusion of underinsured customers who are already covered by government schemes," the survey said, citing schemes such as the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Fasal Bima Yojana (PMFBY), and the Pradhan Mantri Jan Arogya Yojana (PMJAY).

Citing Swiss Re Institute’s projections, the survey said India’s insurance sector is expected to grow 11.1% and become the fastest-growing market among G20 nations over the next five years (2024-2028) supported by factors such as an expanding middle class, technological advancements, and supportive regulatory measures. “The non-life insurance sector is expected to double its premium-to-GDP (gross domestic product) ratio over the next two decades. However, it will remain below the global average," said the survey presented by Union Finance Minister Nirmala Sitharaman in Parliament.

Evolving customer expectations and emerging risks like climate change and geopolitical uncertainty present significant challenges for insurers. Increasing life expectancy and a growing elderly population also pose underwriting risks related to longevity and highlight the widening pension gap. Further, non-financial risks have gained importance