BEEMA ZAROORI HAI

Even as India’s macroeconomic indicators have come for universal acclaim human dignity at micro-household level appears to be compromised to a great extent. Lives & Livelihoods of the underprivileged section has witnessed significant changes in terms of availability of certain basic amenities in the recent past. Access to Pacca house, a workable toilet, electricity has improved a lot with decline in infant & maternal mortality, eradication of certain communicable diseases that can also be felt.

Sounds good. But then where are the challenges? Challenges lie in quality learning outcomes in schools, raising the nutrition level in children especially in anganwadis, provision of quality health services, clean environment, opportunities for quality employment and last but not the least funding the unfunded and providing insurance cover to un-insured.

Financial inclusion (FI) in terms of funding the unfunded, the direct benefit transfer has come a long way with opening of 51.40 Crore accounts under Jan Dhan (PMJDY) where the balance outstanding as on 03.01.2024 is Rs. 2.14 trillion.

The whole world has appreciated India’s FI initiatives for linking nearly half a billion people with the transparent, secure & affordable & gainful phenomena to have a bank account. This not only gives a feeling of identity & recognition but empower them to embark on a path of progress. This has been brought about within a short span of time because of the focus and campaign approach.

Insurance Regulator & Development Authority of India (IRDAI) has committed to enable “Insurance for all by 2047”. The regulator aim at an ecosystem where every citizen has an appropriate life, health & property insurance cover. It also anticipates a situation where every enterprise is supported by appropriated insurable solution and make Indian insurance sector globally attractive.

Sounds marvellous! But then we have to go a long way to achieve these objectives. What are the numbers at present in this sector?

Life with a network of our 11000 offices & nearly 30 lakh agents, the various life insurance players have expanded their reach. However, only 14 percent of our individuals have a life cover. When it comes to the gender ratio, only 9 percent women are covered against 18 percent coverage in case of men. Besides when it comes to the urban rural divide as against 30 percent in urban area only 5 percent in rural area are covered by life insurance.

In the absence of insurance both life & health, coverage of the underprivileged sections of the society. The Financial Inclusion (FI) is not complete. It is the process of ensuring access to financial products & services needed by vulnerable groups at an affordable cost in a transparent manner.

Despite the best of efforts, insurance is still broadly considered to be a push product & insurers believe steps need to be taken to correct the misunderstanding.

	INDIA	GLOBAL
Penetration %
Life	2.82	3.50
Non-Life	0.94	3.88
Total	3.76	7.38
Density
Life	70	$379
Non-Life	24	$439
Total	94	$818

Note: -

                          Penetration – Insurance Penetration is measured as ratio of premium to GDP

                          Density – Insurable premium to total population

What the IRDA have done so far?

IRDAI has committed itself to ensure

Insurance for all by 2047 – Every Indian should have a life, health & property insurance cover & every enterprise is supported by insurance solutions and also making insurance sector globally attractive.

For achieving this, a forward-looking architecture to foster a conducive, inclusive & competitive environment has been put in place. The reforms agenda derives inspiration from GOI’s vision on FI & strong emphasis on reforms.

Recent Initiatives of IRDA include:

(i). Regulations introduced to help in ease of doing business for insurers.

(ii). Introduction of IFRS-17 – The new accounting standard for insurance contracts. This will help global investors better gauge the risk exposure of domestic insurers.

(iii). Regulator has cleared the intent to move towards 100% cashless for health claims, capturing “ABHA” Ayushman Bharat Health Account flagship initiative introduced by IRDAI

BIMA Trinity:

Bima Vahak, Bima Vistar & Bima Sugam are the new initiatives of IRDA. The Last one being one-stop shop for all insurance products.

Bima Vahak – Women oriented distribution channel that will promote trust & insurance awareness in rural areas & promote insurance products.

Bima Vistar – A bundled product that will provide life, health, casualty and property cover in a single insurance policy at an affordable cost.

Another proposal of IRDA is to have a body in line with SLBC which will monitor the implementation of state insurance plans.

Open House – The regulator continues to organise on 15th of every month for the FINTECH & insurance companies to seek suggestions from the stakeholders & redress their grievances, if any.

Gaps:

However, the sector continues to face many impediments due to lack of awareness, low Literacy rates, lack of affordability, accessibility and low outreach in rural areas.

Awareness & illiteracy are both cause and effects. And the Regulator continues to focus on boosting awareness, accessibility & affordability.

Building awareness & trust among diverse population necessitates extensive outreach programs which may strengthen the existing infrastructure.

The expansion of insurance services to remote regions may require additional Investment in physical infrastructure.

Human Capital or rather tech savvy dedicated human resources is the most important material & it is the training & retention of them are key for the growth of the sector.

The AUM Insurance Sector as on Mar’22 stands at Rs. 55 trillion overall out of the which Rs. 50 trillion comes from the life sector.

The insurance sector is our 150 years old and it has taken that much time to generate an AUM of Rs. 55 trillion, whereas the MF industry has done it in less than 60 years.

Like the bankers and the LI agents skilled dedicated employees equipped with insights into local customs, language & economic dynamics can effectively help in increasing the penetration in underserved areas.

The Plan is to create an insurance awareness and financial literacy programme with emphasis on skill development for employment generation.

Summing up – While significant strides have been made continuous investment and innovation in infrastructure are vital for insurance companies to realise the ambitious goals set by Govt./Regulator.