India’s insurance sector has immense potential for investors as it’s one of the booming markets globally. The low penetration and insurance coverage promise a wider scope of growth and expansion. The Insurance Regulatory and Development Authority of India (IRDAI) has set an ambitious goal of 'Insurance for All by 2047’ to coincide with the celebration of the 100 years of Independence in the country. This long-term vision of IRDAI to take insurance to the hinterlands of India needs a rigorous approach to educate people about the importance of insurance- both life and non-life plans.
The insurance sector has seen a major boost over the past few years with both the regulator and the industry coming together to increase insurance coverage while ensuring best benefits for the consumers. However, the journey to realise IRDAI’s Vision 2047 is not free from challenges.
Insurance penetration in India stands at 4% compared to the global average of 7%. In the last few years, the insurance regulator has taken several measures to increase insurance coverage in both life and non-life policy segments. India being the 9th largest life insurance and 14th largest general insurance market globally, the sector promises vast growth opportunities for new insurers. An aggressive plan with regulator and industry collaboration can accelerate the growth for the industry, according to experts.
Sharing their views on the road ahead for IRDAI’s historic target, industry experts shared their views on the ways to expand the horizon of insurance on ‘The Insurance Show’, a new programme launched by CNBC-TV18 in collaboration with PolicyBazaar dedicated to address all queries of viewers on insurance.
Nilesh Sathe, a former member at IRDAI, said that the target set by the insurance regulator is pretty much achievable. Sathe added that with the growing Indian economy, the demand for insurance will only see a surge.
"When per capita income will increase, obviously everybody will think of insurance first. Second is the PMJJBY type of insurance scheme where at a very nominal premium of ₹436 you get a cover of up to ₹2 lakh. Now, everyone has a bank account and going forward everybody will have a bank account. So, Insurance for all is not something which is impossible. It is definitely possible and everybody in the sector has to join hands, to see that it's achieved,” he said.
Sathe mentioned that insurance companies need to go more digital and focus on customer experience, ensuring seamless settlement to bring a larger group under their umbrella.
Sarbvir Singh, Joint Group CEO of Policybazaar parent PB Fintech, emphasised that more efforts have to be put into creating a larger awareness about the need to have insurance as many people still see it as a waste of money and that it may not be used.
“I think the first thing is that for the people who are financially literate and financially capable, we need to get them across the line first. The second thing is the next set of people, where perhaps the financial literacy or income may be lower. There, I think the good news is that they are at least on digital platforms. So, they are there, they are looking over there for information on various things,” he said.
Vibha Padalkar, MD CEO, HDFC Life, highlighted that following the COVID-19 pandemic a larger awareness of why insurance is needed is already there. Padalkar said that the need now is to simplify the process.
“I would tell people, let us not over-intellectualize, get something more than nothing, get something more than 10 times covers that today only a savings policy will give you, let's move beyond that but I think we some distance away from getting stuck in just the complexity of it,” she said.
While term and life insurance have still seen a larger penetration in the Indian market, health insurers are still struggling to tap into the newer segments. This could be due to the reason that insurance products are still seen as ‘expense items’, according to experts.
“There is a larger myth across the insurance products. Most of the insurance products are seen as an expense item. These are not seen as a risk mitigation tool. So, most of us think that either I don't need it or I'll buy it when I need it. Right now, both approaches are extremely faulty,” said Anuj Tyagi, Managing Director at HDFC Ergo.
He emphasised, given the uncertainty in today’s time, the earlier people sign up for the insurance policy the better it is at giving you the window to mitigate the waiting period on certain diseases.
Moneycontrol journalists were not involved in the creation of the article.
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