Q. Which of the following is the most appropriate definition of ‘Insurance Penetration’ for a country?

[A] The ratio of total insurance claims settled to the total premiums collected during a financial year.

[B] The percentage of the total population that holds at least one valid insurance policy.

[C] The ratio of total insurance premium (life and non-life) written in a year to the country’s Gross Domestic Product (GDP).

[D] The total number of insurance companies operating in the country relative to the country population size.

Answer: C
Notes:

Explanation:

Insurance penetration is the key metric used globally to measure the development of the insurance sector. It is defined as the ratio of total insurance premium (both life and non-life) collected in a year to the country’s Gross Domestic Product (GDP). This measure indicates the size of the insurance industry relative to the size of the economy.

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