Insurance penetration in India requires combined efforts of all stakeholders

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Despite heightened curiosity about the need for health coverage after Covid-19, insurance remains underpenetrated in India and requires a combined effort from industry, regulators and government to ensure that people like it more, insurance company chiefs said.

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

The theme of the summit was to close the insurance protection gap.

Naveen Tahilyani, CEO of Tata AIA Life Insurance Co, said that while there has been progress in persistence levels and all major insurance companies have a claims settlement rate above 98%, underwriting standards must improve to reduce rejections.

“When we buy a policy, we have to be sure about the client. The small number of denials that occur shouldn’t, because it should be taken care of at the underwriting stage,” Tahilyani said.

He said the protection gap in India ranged from 83% to 92% with life insurance having a smaller 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, Cast Member, IRDAI said industry needs to jointly own bridging the gap through better reach, using digital technology, data and microinsurance.

“Out-of-pocket expenses, higher treatment costs, and communicable and lifestyle-related diseases are the main drivers of the protection gap. Technology can be a tremendous catalyst for the rapid resolution of claims, the verification of fraudulent claims and the delivery of end-to-end solutions to customer insurance, ”said Rajeswari.

G Srinivasan, director of the NIA, said that the penetration of general insurance is still lower than that of life insurance with only 5% of people having home insurance and 12% of people having health coverage.

“With a majority of people employed in the informal sector, insurance is essential for their well-being, but somehow consumers are signaling that they don’t need insurance,” Srinivasan said.

IRDAI’s Rajeswari said insurers adopting villages like the one proposed by the regulator could be a way to increase awareness.

Tahilyani of Tata AIA Life said companies need to stop relying on medical tests to buy insurance and also use data. “We should engage with the customer more than once a year than just receiving a premium. Maybe there should be products that lower the premium if a person’s health improves, thereby enticing customers, ”he said.

Life Insurance Corp of India (LIC) chairman MR Kumar said that although government programs like Ayushman Bharat have helped spread insurance, accessibility still needs to improve.

With distribution channels such as point-of-sale and CSCs having a digital orientation, simple, low-cost single-line products can accelerate insurance penetration in rural areas, Kumar said.


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