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The average ticket size of life insurance policies has jumped 2.45 times in almost 10 years. According to data from Kotak Institutional Equities, the average premium collected from a retail customer for a regular payment product was Rs 9,942 in FY09 which grew to Rs 22,549 in FY18. For the eight months of FY19, the average premium rose to Rs 24,395.

A rise in the ticket size means customers are willing to pay a higher premium for products. There is a huge gap that exists between the insurance required and the one taken by the policyholders.

Under-insurance is a reality

India is the second-most underinsured country in the world with an insurance gap of $27 billion (approximately Rs 1.98 lakh crore). A survey by specialist insurance and reinsurance market Lloyd’s said while India’s overall level of insurance penetration (total insurance premiums as a percentage of the gross domestic product) has increased 0.2 percent since 2012, it continues to have one of the highest underinsurance levels globally.

Insurance gap refers to the gap between the actual sum assured required versus that taken. For example, if the insurance needed is Rs 100 and an individual has taken Rs 40, the insurance gap is Rs 60.

Banks vs non-bank insurers

The data showed that insurance companies with banks as a large partner have a much higher ticket size. For instance, ICICI Prudential Life Insurance had an average ticket size of Rs 80,365 for the April to November 2018 period.

Canara HSBC OBC Life Insurance came second with an average ticket size of Rs 70,135. However, this was a drop from Rs 82,365 in FY09.

LIC versus the rest

Unlike private sector companies which sell a large proportion of unit-linked insurance plans (Ulips), Life Insurance Corporation of India (LIC) predominantly sells traditional products. The average ticket size for LIC was Rs 13,943 for the April to November 2018 period compared to Rs 5,885 for FY09.

For private insurers, the average for the eight months of FY19 was Rs 52,939 that rose from Rs 18,686 in FY09. The premium collected per policyholder (retail) stood at Rs 52,943 on an average.