What is Insurance__

 Insurance is a contract (policy) in which an insurer

indemnifies another against losses from specific
contingencies or perils.

 There are many types of insurance policies. Life,

health, homeowners, and auto are the most
common forms of insurance.

 The core components that make up most insurance

policies are the deductible, policy limit, and
premium.

How Insurance Works

A multitude of different types of insurance
policies is available, and virtually any individual
or business can find an insurance company willing
to insure them—for a price. The most common
types of personal insurance policies are auto,
health, homeowners, and life. Most individuals in
the United States have at least one of these types
of insurance, and car insurance is required by law.
Insurance Policy Components
Three components of any type of insurance
are crucial: premium, policy limit, and
deductible.

o Premium: A policy’s premium is its price,

typically expressed as a monthly cost. The
premium is determined by the insurer based on
your or your business’s risk profile, which
may include creditworthiness.

o Policy Head: The policy limit is the

maximum amount that an insurer will pay
under a policy for a covered loss. Maximums
may be set per period (e.g., annual or policy
term), per loss or injury, or over the life of the
policy, also known as the lifetime maximum.

o Deductible: The deductible is a specific

amount that the policyholder must pay out of
pocket before the insurer pays a
claim. Deductibles serve as deterrents to large
volumes of small and insignificant claims.
 Types of Insurance
There are many different types of insurance. Let’s
look at the most important.

o Health Insurance: With regard to health

insurance, people who have chronic health issues
or need regular medical attention should look for
policies with lower deductibles. Though the annual
premium is higher than a comparable policy with a
higher deductible, less expensive access to medical
care throughout the year may be worth the tradeoff.

o Home Insurance: Homeowners insurance (also

known as home insurance) protects your home and
possessions against damage or theft. Virtually all
mortgage companies require borrowers to have
insurance coverage for the full or fair value of a
property (usually the purchase price) and won’t
make a loan or finance a residential real estate
transaction without proof of it.

o Auto Insurance: When you buy or lease a car, it’s

important to protect that investment. Getting auto
insurance can offer reassurance in case you’re
involved in an accident or the vehicle is stolen,
vandalized, or damaged by a natural disaster.
Instead of paying out of pocket for auto accidents,
 people pay annual premiums to an auto insurance
company; the company then pays all or most of the
costs associated with an auto accident or other
vehicle damage.

o Life Insurance: Life insurance is a contract

between an insurer and a policy owner. A life
insurance policy guarantees that the insurer pays a
sum of money to named beneficiaries when the
insured dies in exchange for the premiums paid by
the policyholder during their lifetime.

o Travel Insurance: Travel insurance is a type

of insurance that covers the costs and losses
associated with traveling. It is useful protection for
those traveling domestically or abroad. According
to a 2021 survey by insurance company Battleface,
almost half of Americans have faced fees or had to
absorb the cost of losses when traveling without
travel insurance.

What are the four major types of insurance?

There are four types of insurance that most
financial experts recommend everybody have: life,
health, auto, and long-term disability.
Why Should We Buy Insurance
Insurance is a way to manage your risk. When you buy
insurance, you purchase protection against unexpected
financial losses. The insurance company pays you or
someone you choose if something bad happens to you.
If you have no insurance and an accident happens, you
may be responsible for all related costs.

Survey On Insurance After Covid

The Covid-19 pandemic brought about significant
changes in people's behaviour towards protecting
health. To analyse the shift in public awareness about
healthcare.

57% feel their life insurance cover is insufficient:

Survey

India Protection Quotient has risen

(Post Covid):
2021 - 47%
2022 - 50%

IPQ is the degree to which Indians feel protected from future

uncertainties on a scale of 0 to 100, based on attitudes, mental
 preparedness about future uncertainties, awareness and ownership of
life insurance products, including term, endowment and Ulips.
 Life insurance ownership
2021 - 78%
2022 - 78%
*Ownership Level is the degree to which Indians own life insurance, on a scale of 0 to 100.

 Knowledge index
2021 - 68%
2022 - 69%
Knowledge Index is the degree to which Indians are aware of life insurance products, on a
scale of 0 to 100.

 Security level
2021 - 51%
2022 - 56%
Security level is the degree to which Indians feel financially secure and are prepared on a
scale of 0 to 100.

 Life insurance ownership flat at 78%, but more

people are buying term plans
Term Plans:
2021 - 39%
2022 - 43%

 Traditional (Endowment)
2021 - 35%
 2022 - 39%

 Market Linked (Ulips)

2021 - 16%
2022 - 19%

 More people now feel they have inadequate cover

Term plan is sufficient
2021 - 60%
2022 - 41%
 Term plan is insufficient
2021 - 40%
2022 - 57%

 Kids’ goals top priorities for investing

Kid's education 48%
Medical emergency 43%
Old age security/retirement 39%
Kid's marriage 31%

 Premium top criterion for buying term plans

Premium: 71%
Cover: 68%
Features like flexibility/customisation: 65%
Riders/add-on benefits: 52%

 Premium top criterion for buying term plans

Premium: 71%
Cover: 68%
Features like flexibility/customisation: 65%
Riders/add-on benefits: 52%

 Sharp rise in women’s security level; at par

with men
Security level women
2021 - 44%
2022 - 56%

 Security level men

2021 - 54%
2022 - 56%
 Knowledge index
2021 - 70%
2022 - 69%

 87% opt for safe investing

Only marketlinked products: 11%
Only safe products: 41%
Mix of safe & marketlinked products: 46%

 Tier 2 cities lag in term plan adoption

Metro

Conversion ratio: 60
Ownership: 48%

 Tier 1
Conversion ratio: 56
Ownership: 44%

 Tier 2
Conversion ratio: 46
Ownership: 35%

Source: The India Protection Quotient 4.0 survey

was conducted by Max Life Insurance and Kantar
among 5,729 people in 25 cities. All figures may
not add up to 100% due to multiple choices

Pre-Covid______

Travel insurance has evolved since the onset of the

Covid-19 pandemic. According to Go Digit
General Insurance, in the first four months of
2022, the insurer sold 75 per cent of the total
number of travel policies it sold throughout FY21
given the increased awareness.

Digit General Insurance sold over 12.8 lakh travel

policies in FY21-22, a jump of over 100 per cent
compared to the pre-Covid year of FY19-20. The
analysis also revealed that demand for single-trip
policies zoomed 215 per cent in FY21-22 over
FY20-21. In FY22, the company sold nearly 11.7
lakh single-trip travel policies, an increase of 215
per cent over FY21.

Insurance Premium
During the fiscal 2019-20, the gross direct premium
of Non-Life insurers was ₹1,88,916 crores as
against ₹1,69,448 crores, in the previous financial
year 2018-19 registering a growth of 11.49 percent.
Motor and health segments primarily helped the
industry to report this growth.

During the fiscal 2019-20, Life insurance industry

recorded a premium income of ₹5,72,910 as against
₹5,08,132 crores in the previous financial year,
registering a growth of 12.75 percent. While
renewal premium accounted for 54.75 percent of
the total premium received by the life insurers, new
business contributed the remaining 45.25 percent.

Indian Insurance in the Global Scenario

In life insurance business, India is ranked tenth in the world.
India's share in global life insurance market was 2.73 per cent
during 2019. Compared to the previous year, the life insurance
premium in India increased by 9.63 per cent whereas global life
insurance premium increased by 1.18 per cent.

In non-life insurance business, India is ranked 15 in the world.

India's share in global non-life insurance market was 0.79 per
cent during 2019. Compared to the previous year, the non-life
insurance premium in India increased by 7.98 per cent whereas
global non-life insurance premium increased by 3.35 per cent.

Globally, the share of life insurance business in total premium

was 46.34 per cent and the share of non-life insurance premium
was 53.66 per cent during 2019. However, the share of life
insurance business for India was high at 74.94 per cent while
the share of non-life insurance business was at 25.06 percent.

Insurance Penetration and Density

Insurance penetration and density are two metrics,
among others, often used to assess the level of
development of the insurance sector in a country. While
insurance penetration is measured as the percentage of
insurance premiums to GDP, insurance density is
calculated as the ratio of premiums to population (per
capita premium).

Insurance penetration which was 2.71 percent in 2001

has steadily increased to 3.76 percent in 2019 (Life 2.82
percent and Non-Life 0.94 percent). Insurance
penetration in some of the emerging economies in Asia,
i.e., Malaysia, Thailand and China during the same year
were 4.72, 4.99 and 4.30 percent respectively. The
insurance density in India which was USD 11.5 in 2001,
reached to USD 78 in 2019 (Life- USD 58 and Non-Life
- USD 20). The comparative figures for Malaysia,
Thailand and China during the same period were USD
536, USD 389 and USD 430 respectively. Globally
insurance penetration and density were 3.35 percent and
USD 379 for the life segment and 3.88 percent and USD
439 for the non-life segment respectively in 2019.
(Source: SwissRe Sigma various issues)

WHY DO FOREIGN
INVESTORS WANT TO
INVEST IN INDIA?
1.Overseas investors get tax incentives and
subsidized rates.
2.They get preferential tariffs.
3.They get to tap into a new market with
willing buyers.
4.India offers relatively cheaper labour
costs.
5.They also get cheaper wages.
6.FDI in India allows market diversification.

After the liberalization of the economy in 1991,

India opened its market to foreign investors. Over
the years the government has taken several
reforms in foreign direct investment norms in
order to encourage more overseas investor to
invest in the country.

How Can It Provide Benefit To Turtlemint