There is considerable potential for non-life business to grow in Odisha. As urbanization and industrialisation make further headway, demand for general insurance products will pick up.
Dr. Manas R Das
In today’s risk-full life, insurance has emerged as an essential risk mitigation need for everybody. Today also the insurance market in India has not blossomed to its full potential. Globally, India still remains one of the under-insured countries with insurance penetration, i.e., premiums as a percentage of GDP at just 3.7% and insurance density, i.e., per capita premium at USD 74 only (2018).
Today, we focus on the non-life (General) sector.
According to the data in the “Indian Non-life Industry Yearbook, 2018-19 (hereinafter referred as Yearbook)” published by the General Insurance Council,in Odisha, non-life insurance penetration and density were as low as 0.77% (all-India = 0.89%) and `767(all-India = `1,287) respectively (2018-19). In terms of Gross Direct Premium Income, Odisha was positioned 14th from the top, up from 15th in 2017-18, in a group of 36 States/Union Territories.
Compared to the all-India position, by premium income, the performance of the State was encouraging. During 2013-14 to 2018-19, the Compound Annual Growth Rate (CAGR) in premium income posted by Odisha at 17.8% was 86 basis points above that for the country.The share of premium income in Odisha in the country total has been hovering around two percent (Table 1).
During 2015-16 to 2018-19, premium income from all lines of business reflected increasing trends as can be gleaned from Table 2.
At March-end 2019, Odisha had 356 offices of the general insurers (including Standalone Health Insurers) constituting 3.1% of the total number of offices in the country. Between2014-15 and 2018-19, 36 offices were added on net basis (excluding Standalone Health Insurers, Agriculture Insurance Corporation and Export Credit Guarantee Corporation of India Ltd.). Disaggregated data on the private and government players were latest available up to 2017-18. Considering this data, while the private insurers added 16 offices, the public insurers 19 offices (on net basis).
There is considerable potential for non-life business to grow in Odisha. As urbanization and industrialisation make further headway, demand for general insurance products will pick up. However, this needs to be backed by changes in people’s perception of and attitude towards risk and risk mitigation, which will be possible only through financial awareness and sophistication. Odisha provides a fertile business ground for agriculture, marine, health and catastrophe insurance, besides various micro insurance products.
About the Author:Dr. Manas R. Das is a former senior economist of State Bank of India. He has over 30 years of experience as an economist in two large commercial banks. Academically, he is a gold medallist in Bachelor of Arts with Economics Honours from Utkal University, followed by Master’s in Economics from Delhi School of Economics and Doctorate in Economics from Gokhale Institute of Politics and Economics. He is also a Certified Associate of Indian Institute of Bankers. He has won several awards, besides being a prolific writer.