Insurance penetration is up to 4.6% in 2009 from 2.32% in 2000.
The Economic Survey 2009-10 has emphasised the need to open up certain segments of the insurance sector, like health, to foreign investment and remove the 10-year disinvestment clause.
“The amendments to the Insurance Act and the Irda Act focus on the current regulatory requirements, the proposed changes provide for more flexibility in operations and are aimed at deletion of clauses that are no longer relevant in the present context,” the Survey says.
Foreign direct investment (FDI) will be increased to 49 per cent from 26 per cent after the amendments to the Act. The amendments will give additional powers to Irda.
The Survey highlighted the increase in insurance penetration, which is up to 4.6 per cent — 4 per cent in life and 0.6 per cent in non-life segments in 2009, from 2.32 per cent — 1.77 per cent in life and 0.55 per cent in non-life in 2000. Insurance penetration is defined as the ratio of premium underwritten in a given year to the GDP.
In the non-life segment, the Survey says, Irda is working on a formal data warehouse to enable access by various stakeholders across the industry. As a first step, Irda has designed a data set relating to health and motor vehicle insurance. This would help the non-life insurers design new products and allow scientific underwriting, further calculations of actuarial risks, price setting and various aspects relating to claims settlement, and management of hazards.
The Survey says there is a pilot on weather-based crop insurance scheme being implemented in 13 states to provide insurance protection to farmers against adverse weather incidences which are deemed to adversely impact crop production. During five crop seasons from kharif 2007 to kharif 2009, about 2.18 million farmers have been covered under the pilot scheme and claims to the tune of about Rs 388 crore have been paid against a premium of Rs 444 crore.
To provide protection to farmers and cattle rearers, the Survey says a central scheme for livestock insurance is being implemented in the states against loss of animals due to death and to demonstrate the benefit of livestock insurance to the people. In 2009-10, Rs 23.28 crore has been released up to December 2009 and 1.32 million animals have been insured up to 2008-2009.
Statutory status to PFRDA The Survey recommends provision of a statutory status to the pension regulator that would help the Pension Fund Regulatory & Development Authority (PFRDA) perform effectively.
“The success of pension reforms will not only facilitate the flow of long-term savings for development, but also help establish a credible and sustainable social security system in the country,” it says.
