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Consider the following statements:
1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.
2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).
Which of the statements given above are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Consider the following statements:1. Insurance penetration is the rati...
The growth in the insurance sector is internationally measured based on the standard of insurance penetration.
- Statement 1 is incorrect: Insurance penetration is defined as the ratio of premiums underwritten in a given year to the gross domestic product (GDP). It is one of the parameters used to assess the level of development of the insurance sector in a country. In 2021-22, insurance penetration in India stood at 4.2 per cent (life insurance penetration at 3.2 percent and general insurance, including health, at 1 percent). This is quite low when compared to other developed economies such as the US and Canada (11.4 per cent) and advanced Europe, Middle-east and African regions.
- Statement 2 is incorrect: Insurance density is another well-recognised benchmark and is defined as the ratio of premiums underwritten in a given year to the total population (measured in US dollars for convenience of comparison). In India, insurance penetration has grown from 2.3 per cent (life 1.8 per cent and nonlife 0.7 per cent) in 2000 to 3.9 per cent (life 3.1 per cent and non-life 0.8 per cent) in 2013. In the comparable period, insurance density has improved from US$ 11 to US$ 52.
Most Upvoted Answer
Consider the following statements:1. Insurance penetration is the rati...
Explanation:
Insurance penetration and insurance density are two important indicators used to measure the development of the insurance sector in a country. Let's break down the given statements to understand them better:
1. Insurance Penetration:
- Insurance penetration is the ratio of premium underwritten in a given year to the total population. It measures the extent to which insurance products are being utilized by the population.
- The formula for calculating insurance penetration is: Insurance Penetration = (Premium Underwritten / Total Population) * 100
- It is expressed as a percentage and helps in assessing the level of insurance coverage in a country.
2. Insurance Density:
- Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP). It indicates the level of insurance activity in relation to the economic output of a country.
- The formula for calculating insurance density is: Insurance Density = Premium Underwritten / GDP
- It is measured in terms of currency (e.g., USD) and provides insights into the size of the insurance market relative to the overall economy.
Analysis of the Statements:
- The first statement correctly defines insurance penetration as the ratio of premium underwritten to the total population.
- The second statement correctly defines insurance density as the ratio of premiums underwritten to the GDP.
- Therefore, both statements are correct in their definitions and explanations.
Conclusion:
- Both statements 1 and 2 are correct as they accurately describe insurance penetration and insurance density, respectively. These indicators are essential for evaluating the insurance sector's performance and its contribution to the economy.
Insurance penetration and insurance density are two important indicators used to measure the development of the insurance sector in a country. Let's break down the given statements to understand them better:
1. Insurance Penetration:
- Insurance penetration is the ratio of premium underwritten in a given year to the total population. It measures the extent to which insurance products are being utilized by the population.
- The formula for calculating insurance penetration is: Insurance Penetration = (Premium Underwritten / Total Population) * 100
- It is expressed as a percentage and helps in assessing the level of insurance coverage in a country.
2. Insurance Density:
- Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP). It indicates the level of insurance activity in relation to the economic output of a country.
- The formula for calculating insurance density is: Insurance Density = Premium Underwritten / GDP
- It is measured in terms of currency (e.g., USD) and provides insights into the size of the insurance market relative to the overall economy.
Analysis of the Statements:
- The first statement correctly defines insurance penetration as the ratio of premium underwritten to the total population.
- The second statement correctly defines insurance density as the ratio of premiums underwritten to the GDP.
- Therefore, both statements are correct in their definitions and explanations.
Conclusion:
- Both statements 1 and 2 are correct as they accurately describe insurance penetration and insurance density, respectively. These indicators are essential for evaluating the insurance sector's performance and its contribution to the economy.
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Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?.
Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. Insurance penetration is the ratio of premium underwritten in a given year to the total population.2. Insurance density is the ratio of premiums underwritten in a given year to the gross domestic product (GDP).Which of the statements given above are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?.
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