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Insurance penetration in India requires combined efforts of all stakeholders


Despite increased curiosity about the need for a health cover post the Covid-19, insurance remains underpenetrated in India and requires a combined effort by industry, regulators and the government to ensure people value it more, chiefs of insurance companies have said.

Insurance chiefs were speaking at the National Insurance Academy (NIA) organised annual insurance summit on Thursday.

The theme of the summit was closing the insurance protection gap.

Naveen Tahilyani, CEO, Tata AIA Life Insurance Co said though there has been progress in persistency levels and all top insurance companies’ claim settlement ratio was more than 98%, underwriting standards have to improve to reduce rejections.

“When we take on a policy we must be sure of the customer. The small amount of rejections that happen should not because it should be taken care of at the underwriting stage,” Tahilyani said.

He said the protection gap in India ranges from 83% to 92% with life insurance having a lower gap. But it is still higher than developed markets like Hong Kong, Australia and Singapore and even developing markets like China which has a 70% gap.

SN Rajeswari, member distribution, IRDAI said the industry must jointly taken ownership of filling the gap through better reach, using digital technology, data and micro insurance.

“Out of pocket expenses (OOP), higher cost of treatments and communicable & lifestyle diseases are the major contributors of protection gap. Technology can be a great enabler in quick settlement of claims, checking fraudulent claims and providing end to end solutions to the insurance customers,” Rajeswari said.

G Srinivasan, director at NIA said penetration in general insurance is even lower than life insurance with only 5% of people having home insurance, and 12 % of people having a health cover.

“With a majority of people employed in the informal sector, insurance is critical for their well being but somehow consumers are signalling that they do not need insurance,” Srinivasan said.

Rajeswari from the IRDAI said that insurers adopting villages like it is proposed by the regulator could be one way of increasing awareness.

Tahilyani from Tata AIA Life said companies have to stop depending on medical tests to underwrite insurance and also use data. “We should engage with customer more than once a year than just while receiving premium. May be there should be some products which allows the premium to be reduced if the health of a person improves, thus incentivising customers,” he said.

Life Insurance Corp of India (LIC) chairman MR Kumar said that though government schemes like Ayushman Bharat has helped the spread of insurance, accessibility needs to improve further.

Distribution channels like POS and CSCs having digitally orientation, low cost and simple mono-line products can fast track the insurance penetration in the rural areas Kumar said.



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