13.8         ndian      onom
               with the government-owned insurance                US$ 323.4 and US$ 337.1 respectively—while
               companies, private companies are                   global average was US$ 638.3 (US$ 353 for Life
               always ready with highly attractive                and US$ 285.3 for Non-Life).
               and lucrative insurance schemes, but                     As per the area experts and the insurance
               they have not been able to attract the             regulator, there are several factors responsible for
               clients for them. Therefore, the private           the low insurance penetration in the country—
               insurance companies have been fetching             major ones of them are as given below:
               huge operational losses due to lack of the               (i) Complex and delayed claim settlement
               desired level of their expansion and the                      procedures;
               overhead expenditure.19
                                                                       (ii) Vague and incomprehensible rules and
                                                                             regulations of the insurance companies;
        insurance penetration
                                                                      (iii) Lack of education and awareness among
     The growth in the insurance sector is internationally                   the masses;
     measured based on the standard of insurance                      (iv) Lower income levels of the population;
     penetration. Insurance penetration is defined as                  (v) Socio-cultural factors;
     the ratio of premium underwritten in a given year                (vi) Lack of level playing field in the industry;
     to the Gross Domestic Product (GDP). Likewise,                          and
     insurance density is another well recognised
                                                                     (vii) Less vibrancy in the regulatory framework.
     benchmark and is defined as the ratio of premium
     underwritten in a given year to total population                   Recently         enacted       Insurance        Laws
     (measured in US dollars for convenience of                   (Amendment) Act, 2015 is supposed to have
     comparison). The Indian insurance business has               positive impact on regulatory framework as well
     in the past remained under-developed with low                as insurance penetration.
     levels of insurance penetration.
                                                                  Policy initiAtives
          In 2016 (latest)20, insurance penetration in
     India was 3.49 per cent (was 2.71 per cent in                Committed to expand and strengthen, the
     2001)—2.72 per cent for Life and 0.77 per cent               insurance industry in the country (following the
     for Non-Life segments respectively. Insurance                recommendations of the Malhotra Committee
     Penetration in some of the emerging economies                Report, 1993), the Government of India has taken
     in Asia, i.e., Malaysia, Thailand and China during           the following policy initiatives21 in recent years:
     the same year were 4.77 per cent, 5.42 and 4.15                    (i) Health Insurance: The Insurance
     per cent respectively—while at global level it was                      Regulatory Development Authority
     3.47 per cent.                                                          (IRDA) has been taking a number of
          The insurance density (in 2016) in India was                       proactive steps as part of the initiatives
     US$ 59.7 (was US$ 11.5 in 2001)—US$ 46.5 for                            for the spread of health insurance. It
     Life and US$ 13.2 for Non-Life segments. The                            had set up a National Health Insurance
     comparative figures for Malaysia, Thailand and                          Working Group in 2003, which provided
     China during the same period were US $452.2,                            a platform for the various stakeholders
                                                                             in the health insurance industry to
       19.  G. V. Rao, CMD, Oriental Insurance Co. Ltd., Survey              work together and suggest solutions
            of Indian Industry 2007, The Hindu, pp. 87–90.
       20.  Economic Survey 2017-18, Vol. 2, Ministry of Finance,   21.    Ministry of Finance, Economic Survey 2011–12, (New
            GoI, N. Delhi, p. 55.                                          Delhi: Government of India, 2012), pp. 128–29.