The Insurance Regulatory and Development Authority of India (IRDAI) has once again released its annual report, focusing on metrics such as insurance penetration and density, which measure premiums as a percentage of GDP and per capita, respectively. However, it notably fails to address the average sum assured per policyholder, a critical indicator of how well insurance protects families in the event of a loss. Currently, India's insurance density stands at $97 per capita, a stark contrast to the global average of $943. This lack of measurement is significant, as it does not reflect the adequacy of insurance coverage available to the public.

The report reveals that the life insurance industry paid ₹60,800 crore in commissions for the fiscal year 2024-25, which is an 18% increase from the previous year, while premium income grew by only 6.73%. This discrepancy highlights a troubling trend where agents are incentivized to sell high-premium products that often deliver less value, such as Unit Linked Insurance Plans (ULIPs) and endowment plans, rather than simple term policies that provide genuine protection. The report indicates that ₹2.33 lakh crore was paid out in surrenders and withdrawals, suggesting that many customers are exiting policies that do not meet their needs. To enhance transparency and better serve consumers, IRDAI should consider publishing the average sum assured and its ratio to average annual income.