New Delhi: The Economic Survey said on Monday that crop, motor and health insurance policies majorly enabled the non-life insurance sector to log 33 percent growth in 2016-17.
According to the survey, tabled in Parliament by Finance Minister Arun Jaitley, during 2016-17, the Gross Direct Premium (GDP) of non-life insurers (within India) was Rs 130.97,000 crore, registering 33 percent growth (highest ever since 2000-01).
Crop insurance, motor sales, health insurance and others helped the industry report this growth.
On the other hand, the life insurance industry recorded a premium income of Rs 418,000 crore as against Rs 367,000 crore in the previous financial year, registering a growth of 14.04 percent, the survey said.
As regards the spread of insurance in the country, the survey said the insurance penetration which was 2.71 percent in 2001, increased to 3.49 percent in 2016 (life 2.72 percent and general or non-life 0.77 percent), IANS reported.
Insurance penetration is defined as the ratio of premium underwritten in a given year to the gross domestic product (GDP). The insurance density in India, which was $11.5 in 2001, has increased to $59.7 in 2016 (life 46.5 and general 13.2).
What Modi government may offer in 2018 budget for insurance sector:
It is being speculated that the government is likely to increase the budget allocation for the Pradhan Mantri Fasal Bima Yojana (PMFBY) to Rs 13,000 crore for 2018-19 from Rs 10,701 crore for the current financial year.
Under the upgraded crop insurance scheme PMFBY, launched in early 2016, farmers pay a very nominal premium and get a full claim for the crop damage.
PTI quoted sources as saying that the budget allocation for the PMFBY could go up to Rs 13,000 crore for the next fiscal taking into account about 10 percent likely increase in the sum insured.
While the agriculture ministry has demanded Rs 11,000 crore budget for the next fiscal for the flagship scheme, the ministry is hopeful of getting more funds from the finance ministry considering the importance of the scheme.
For the current fiscal, the government had initially given a budget of Rs 9,000.75 crore for the PMFBY. However, the additional requirement of Rs 1,701 crore was made through supplementary demands, taking the total allocation to Rs 10,701 crore for the scheme, sources added.
Total crop insurance claim for 2016-17 crop year (July- June) is estimated to be Rs 15,500 crore. Already claims to the tune of Rs 13,661 crore have been reported, of which Rs 12,313 crore have been settled, according to official data.
As many as 5.70 crore farmers purchased the crop insurance policy PMFBY during 2016-17 crop year.
Under the PMFBY, farmers premium has been kept lower between 1.5-2 percent for foodgrains and oilseed crops, and up to 5 percent for horticultural and cotton crops.
There is no cap on the premium and 25 percent of the likely claim will be settled directly in farmers accounts
It is also being speculated that the Narendra Modi government may offer health insurance coverage of upto Rs 5 lakh to every citizen in the upcoming budget.
As per reports, Jaitley, when he presents the Union Budget 2018 on February 1, may allocate Rs 5,000 crore under Centrally Sponsored Scheme (CSS) for the health insurance sector.
The government may also consider setting up of a trust to roll out the scheme, under which everyone will be provided health insurance benefit between Rs 3 and 5 lakh, reports further said.
Currently, only around 4 percent of the population in the country has health insurance coverage, it has been reported. The major reason for the low penetration of health insurance is that it is currently optional.
Insurance sector and what the 2017 budget had been like:
In 2017 the general insurance industry had hailed the Union Budget and had welcomed the government's decision to increase the coverage under the Pradhan Mantri Fasal Bima Yojana from 30 percent to 40 percent in 2017-18 and 50 percent in 2018-19.
"Indian farmers need risk mitigation mechanism in the form of insurance and PMFBY will compensate them whenever they suffer crop loss during natural disasters," New India Assurance CMD G Srinivasan had said at that time, as per PTI.
The increase in insurance cover under PMFBY will result in an increase in premium by 15-20 percent by the industry in the next fiscal," National Insurance chairman and managing director, Sanath Kumar had said.
ICICI Lombard MD & CEO, Bhargav Dasgupta had said, "This government has done more to promote insurance as a risk mitigation tool and the decision to increase the coverage under the Pradhan Mantri Fasal Bima Yojana to cover 40 percent of crop area is a continuation of that approach.
"With a view to boost the agricultural sector, the government has increased the coverage under the Pradhan Mantri Fasal Bima Yojana from 30 percent to 40 percent in 2017-18 and 50 percent in 2018-19 which will help farmers get insured," M Ravichandran, president - insurance, Tata AIG General Insurance had said.
(With Agency inputs)