Multiple regulatory changes and industries’ response to them kept the insurance sector in limelight in 2023. The year started with the newly introduced reforms in taxation for life insurance companies following which there were reforms which were introduced in the products, accounting and investment verticals.
The insurance regulator, IRDAI in its annual report has summarised these reforms and the impact on the industry. Here are the most interesting observations.
As per IRDAI’s annual report, life insurance companies paid a total of ₹5 lakh crore worth of benefits in 2023. The total benefit was 64% of the net premiums collected by life insurance companies. Under benefits, the benefits of surrender or withdrawal paid increased by 26% in 2023 over the previous year.
Under the individual business, life insurance companies settled 10.6 lakh policies as claims out of the total 10.76 lakh policies received.
A total amount of ₹28,611 worth of claims was settled by life insurance companies under the individual business against ₹30,216 crore worth of claims received for settlement.
Under the group business, life insurance companies settled 12.4 lakh policies as against 12.48 lakh policies which were received for claims. A total amount of ₹17,178 crore worth of claims was settled by life insurance companies under the group business against ₹17,769 crore worth of claims received for settlement.
The claim settlement ratio in individual segment on policies settled stood at 98.45% and on amount settled stood at 94.69%. The claim settlement ratio for group segment on policies settled stood at 99.35% and on amount settled stood at 96.67%. Life insurance industry’s total claim settlement ratio dropped to 98.45% in 2023 as compared to 98.64% in 2022.
It was a year when losses for public sector general insurance companies also mounted. The total underwriting losses for the general insurance industry in 2023 stood at ₹32,797 crore. 77% or ₹25,317 crore of the general insurance industry’s total underwriting loss came just from public sector general insurance companies- New India Assurance, National Insurance, Oriental Insurance and United India Insurance. Public sector general insurance companies made a net loss of ₹11,000 crore in 2023 whereas private insurers made a net profit of ₹4,665 crore.
Public sector general insurance companies appeared quite weak on solvency front as well.
On one hand where all private insurance companies complied with minimum regulatory solvency level of 150%, public sector general insurance companies defaulted in it. National insurance and United India Insurance had solvency of 29% whereas Oriental Insurance had solvency of 96%.
The awareness around insurance definitely increased in 2023 but that failed to show up in numbers. As per a report from Swiss Re Sigma, life insurance penetration in 2023 reduced to 3% against 3.2% in 2022. General insurance penetration remained constant at 1% in 2023. The average global insurance penetration stood at 6.8% insurance penetration is the ratio of total premium collected to the Gross Domestic Product (GDP)
Insurance density in 2023 showed minor improvement. Life insurance density in 2023 improved to US $92 as compared to US $91 in 2022. General insurance density I. 2024 remained constant. Global insurance density for 2023 stood at US $853. Insurance density is a country’s per capita premium.
In 2023, the life insurance industry added 1.85 lakh agents to distribute insurance products. The growth in 2023 agent force was 8% over 2022.
The agent growth for private life insurance industry was 15% whereas LIC’s agent growth was close to 2%. LIC’s agent force is bigger than the agent force of the entire private life insurance industry out together. At the end of 2023, LIC ‘an agent force stood at 13.47 lakh as compared to private life insurance industry’s agent force of 12.8 lakh.
To speak about investments from the insurance industry. Insurance industry investments stood at ₹60.04 lakh crore at the end of March 2023 as compared to ₹54.36 lakh crore at the end of March 2022. Life insurance industry’s share out of the total investments of the insurance industry was 91%, general insurance industry’s share was 7.15% whereas reinsurance companies share was 1.85%.
To end this on a positive not, the policyholder grievances against life insurance companies in 2023 came down. Total number of grievances against life insurance companies reduced by 18% in 2023. The ratio of total unfair business to new policies issued also remained contract at 0.09% in 2023.
(Edited by : Anushka Sharma)
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