Page 31 - The Insurance Times January 2025

452% in 2022-23 as compare to 2021-22. But the commis- and business strategies for the benefit of its future course
sion expenses ratio slightly increased to 5.41% in 2022-23 of business and for the benefit of policy holders.
from 5.18% in 2021-22.
7.2 As the newly coming private life insurance companies
6. Insurance Penetration and Insurance are mainly trying to enter the untouched rural areas so LICI
has to arrange insurance awareness programme in the ru-
Density ral areas to expand their business.
Insurance penetration and insurance density are two impor-
tant terms used in the insurance sector to assess the stage 7.3 The agents play a pivotal role for the growth of life in-
of development of insurance sector in the country. Insur- surance industry. Incentive schemes for the agents of life
ance penetration is measured as the percentage of insur- insurance companies are to be introduced by both private
ance premiums to Gross Domestic Product (GDP). The in- and public life insurance companies. Agents motivate people
surance penetration of non-life insurance sector in India is to take life insurance policy and expand the life insurance
remained at 1% in the year 2021-22 and 2022-23. India's coverage. So different incentive schemes like bonus, com-
overall insurance penetration reduced to 4% in 2022-23 from mission, medical facility, insurance facility, vehicles facility
the level of 4.2% in 2021-22. Insurance density is calcu- and other incentives are to be provided.
lated as the ratio of insurance premium to population.
7.4 The life insurance sector earned a profit after tax of
As per Swiss Re Sigma World Insurance Report, globally in- Rs.42, 788 crore but commission expenses ratio was only
surance penetration was 2.8 per cent for the life insurance 5.41% during 2022-23. As agents play a significant role in
sector and 4 per cent for the non-life insurance sector. Over- the insurance sector so commission expenses ratio must be
all, insurance penetration was 6.8 per cent in 2022. It is increased for the benefit of the insurance agents both of
seen from the above table that insurance density is nearly public sector life insurance companies and private sector life
ninety times more in USA and fifty times more in United insurance companies.
Kingdom than that of India. The world average insurance
density is 354 and India's position is far below than the world 7.5 As the insurance density and insurance penetration in
position. India is very low than the globe so both twenty three pri-
vate life insurance companies and one public life insurance
7. Suggestions and conclusion company have to play a crucial role to enhance the insur-
7.1 Since private life insurance companies are functioning ance density and insurance penetration not only for the
with new innovative products and ideas so Life Insurance development of insurance sector but also for the develop-
Companies of India (LICI) has to change its administrative ment of the country as a whole.

Table: 5 Insurance Penetration and Insurance Density in India and Globe (2022-23)
Country Insurance Penetration Insurance Density
Life Non-Life Total Life Non-Life Total
Insurance Insurance Insurance Insurance
United States of America 2.6 9.0 11.6 2,017 6,868 8,885
United Kingdom 8.1 2.4 10.5 3,669 1,111 4,781
Switzerland 3.0 3.9 6.9 2,730 3,634 6,364
France 5.5 3.2 8.7 2,239 1.339 3,578
Germany 2.4 3.5 5.9 1,182 1,699 2,881
South Korea 5.4 5.7 11.1 1,705 1,836 3,541
Japan 5.9 2.3 8.2 1,942 748 2,690
India 3.0 1.0 4.0 70 22 92
World 2.8 4.0 6.8 354 499 853
Source: Swiss Re, Sigma Reports on World Insurance4/2022 and 3/2023

28 January 2025 The Insurance Times