Protection gap in India at ₹480L cr: IRDAI

The insurance regulator said that the protection gap, which refers to the required cover and the cover actually availed, in Indian life insurance is Rs.480 lakh crore. The regulator also said that the health insurance market in India has a Rs.3-lakh crore potential.

Speaking at the FICCI annual insurance summit in Mumbai, T S Vijayan, chairman, Insurance Regulatory and Development Authority of India, said that over Rs.6 lakh crore of insurance premium was collected in India in 2017. The potential is even bigger, he said.

“The average award by the motor insurance claims tribunal to accident victims is Rs.5 lakh,” said Vijayan. This includes children, women, senior citizens across classes. “Organizations like MACT value the average life at Rs.5 lakh. Even if you take the population size to be 100 crore, the required total sum insured is Rs.500 lakh crore as against Rs.120 lakh crore,” said Vijayan.

According to Vijayan, there is a similar protection gap in health insurance. “If you consider the Rs.3 lakh crore spent by people on healthcare, this should be the size of the health insurance market if all the costs were to be borne by insurance,” said Vijayan.

Speaking about the opportunities in the Indian insurance market, Vijayan said that with several foreign reinsures setting up branches in India and Gift city throwing open offshore opportunities India could become a reinsurance hub.

Later speaking to newspersons, Vijayan said that the regulator would come out with new reinsurance regulations are coming by February end. The regulations will define the business in India and the order of preference, he added.

On foreign companies showing interest in entering the Indian market, the regulator said there are four or five that have applied for licences and have evinced keen interest on the non-life and health front.

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