Insurance penetration refers to the ratio of the premium underwritten to the Gross Domestic Product (GDP). It is a measure used to assess the level of insurance coverage within an economy. The correct answer is option 'C', which states that insurance penetration is the ratio of the premium underwritten to the Gross Domestic Product.

Explanation:

1. Insurance Penetration:
- Definition: Insurance penetration is a measure that indicates the extent to which insurance products are being utilized within an economy.
- It helps in determining the level of insurance coverage and the contribution of the insurance sector to the overall economy.
- Insurance penetration is typically expressed as a percentage.

2. Premium Underwritten:
- Definition: The premium underwritten refers to the total value of insurance premiums collected by insurance companies within a specific period.
- It represents the revenue generated by insurance companies from selling insurance policies.

3. Gross Domestic Product (GDP):
- Definition: GDP is the total value of all goods and services produced within a country in a specific period.
- It is a measure of the economic activity and represents the overall size of the economy.

4. Insurance Penetration Ratio:
- Formula: Insurance Penetration = (Premium Underwritten / GDP) * 100
- The insurance penetration ratio is calculated by dividing the total premium underwritten by the GDP and multiplying it by 100 to get a percentage.
- It indicates the percentage of GDP that is covered by insurance premiums.

5. Importance of Insurance Penetration:
- Insurance penetration is an important indicator of the level of insurance coverage within an economy.
- Higher insurance penetration implies a greater level of risk coverage and financial protection for individuals and businesses.
- It also signifies the maturity and development of the insurance sector within a country.
- Insurance penetration is influenced by various factors such as income levels, awareness about insurance, regulatory environment, and economic development.

In conclusion, insurance penetration is the ratio of the premium underwritten to the Gross Domestic Product (GDP). It is a measure that indicates the level of insurance coverage within an economy and the contribution of the insurance sector to the overall economy.