Performance of Insurance Industry in India: A Critical Analysis
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Abstract
There is ample empirical evidence to vindicate the relationship between the performance of insurance industry and economic development. In spite of it, there is a dearth of empirical research in developing countries and analytical studies are limited in number, particularly in developing countries like India, where the insurance penetration and density are very low compared with international levels. In India, the growth rate of number of new policies issued and the insurance premium are experiencing a negative trend for the last three years. Reasons and contributing factors for this state of affairs is highly essential. The present paper primarily deals with these aspects of insurance industry and a comparative analysis of both private and public sectors of life and non-life insurance industry. Four indicators-Premium incomes, Market Share, New Policies Issued and Claims Settlement Ratio– have been used to analyze the performance of Insurance industry. Besides, an overview of share of Indian insurance industry in the global insurance industry and inter-state variations in insurance penetration and density in India have been presented to assess the current status of insurance industry in India. As observed by the World Insurance Report -2014, the insurance industry has to inquire into these basic indicators of performance measurement and initiate the measures for improving its performance in the coming years.
Keywords: Insurance, penetration, density, insurance inclusion.