With the country's Gross Domestic Product (GDP) growth rate touted to be the one fastest in the world, projected at 7.4 per cent for FY2019 by the Reserve Bank of India (RBI), there is ample room for expansion of the insurance industry, noted Subhash Khuntia, Chairman, Insurance Regulatory and Development Authority of India (Irdai).

During his speech Khuntia touched upon how insurance products are not being sold effectively to the younger generation and how insurance companies are lagging behind in terms of creating awareness.

"As GDP grows, savings rate will grow, which can be channelised to different financial products. With higher GDP growth rate, we will see large growth in the insurance industry. Today, the insurance industry contributes a lot to the GDP, as the assets under management for insurance stand at Rs 35 trillion, compared to the mutual funds industry where total AuM stands at Rs 23 trillion," Khuntia said.

"Penetration is the biggest issue. We are under-insured in both life and general insurance products. In the motor segment, around 65 per cent of two-wheelers and at least 45 per cent of four-wheelers do not have insurance, and in Kerala, we are seeing that the penetration of property insurance is very low," he said.

Overall insurance penetration in India stands at 3.69 per cent of GDP as compared to the world average of 6.2 per cent of GDP. For life insurance, penetration in India stands at 2.76 per cent of GDP as compared to the world average of 3.33 per cent of GDP. General insurance penetration is even worse, standing at 0.93 per cent of GDP in India as opposed to the world average of 2.8 per cent of GDP.

Speaking at the 11th Global Insurance Summit, organised by Assocham in Mumbai, Khuntia also said that the regulator would launch a 'regulatory sandbox' soon.

"The sandbox will be used for new products that have not been tested. For example, some companies may want to experiment with innovative products, therefore through the 'sandbox' method, we will allow to them to test the product in a limited geography or on a limited number of policyholders," he said.