'Insurance for all' by 2047 challenging at current industry pace, says expert

Insurance

The goal of achieving "Insurance for All" by 2047 seems out of reach given the current passive industry attitude, said T L Alamelu, Principal Advisor, International Financial Services Centres Authority (IFSCA).

Speaking at the 18th IR India Rendezvous on January 22, 2025, Alamelu noted that while there is a readiness in terms of distribution and ecosystem, the actual implementation has been slow.

The Insurance for All initiative is a goal set by the India Insurance Regulatory and Development Authority (IRDAI) in 2022 to ensure that the country's 1.4-billion population is insured by 2047.

Since the government's push from around 2014 to expand insurance coverage, there has been some progress, she said, while adding that there is a need for an aggressive approach.

According to a recent report by the IRDAI, insurance penetration in the country slowed down from 4 percent in FY23 to 3.7 percent in FY24. Insurance penetration is measured as the percentage of insurance premiums to GDP, and insurance density is calculated as the ratio of premium to population (per capita premium), according to the report. Alamelu questioned the reliability of these metrics for measuring insurance penetration, stating that the numbers are too "high-level," and asked if they truly reflect the situation on the ground.

In India, insurance to the lower-income population is normally channelised through schemes such as Ayushman Bharat, or State-specific programmes. This leads to significant variations in how insurance is provided and measured, Alamelu said. As a solution, she suggested the development of a new, tailored metric to capture insurance coverage in India better.

She further highlighted the role of the unorganised sector in health insurance, mentioning Employee State Insurance (ESI) hospitals and small pension schemes. The ESI Scheme provides medical benefits primarily to workers in the organised sector. Extending ESI benefits to the unorganised sector, comprising millions of workers, will help cover a vast portion of the population that traditionally has limited access to the formal insurance structure, she said.

Additionally, she urged insurers to develop more Gross Direct Premium Income (GDPI) plans tailored to the needs, affordability, and characteristics of specific demographics.

GDPI refers to the total premium income collected by an insurance company from policyholders.

She suggested the possibility of creating an "insurance Aadhaar" or "insurance PAN card" to streamline and track insurance coverage across the population. She gave the example of vehicle insurance where despite legal mandates, 60 percent of vehicles remain uninsured.

"By leveraging data from the VAHAN database, which captures all vehicle registrations, and comparing it with insured vehicle data held by regulators, there is an opportunity to target and close this gap," she added.