The insurance industry has proved to be resilient during the tough times of the Covid-19 pandemic, SN Rajeswari, member (distribution), Insurance Regulatory and Development Authority of India (Irdai), said on Thursday.
“The insurance industry faced a slowdown in the gross premium, particularly in the life sector, in 2021. In the first quarter, it faced difficulties with lower premiums and increase in claim payments. It was a tough year, but the industry has proved to be resilient. The Indian insurance industry registered a growth 12.78% in the non-life sector and 10% in the life sector up to September 2021,” Rajeshwari said.
She was speaking at the insurance summit organised by the National Insurance Academy, Pune, on the insurance protection gap in the country.
In 2020, the pandemic widened the protection gap with job losses and movement of labour, she said. A widening protection gap will affect the country’s financial stability and growth, with a huge financial burden in future, she warned. There is a need to close the protection gap. Low penetration is an opportunity for the industry to grow further, she said.
On the health protection gap, she said while health insurance is picking up, the spurt in business is limited to the middle class and above, leaving the vulnerable population uninsured. Though the government’s health schemes are available, they have not reached the people to the full extent, she said.
Rajeshwari urged insurance companies to revisit their products and come up with new innovative offerings. Irdai has come up with the idea of insurance companies adopting villages and ensuring 100% insurance in each. If 500 villages can be covered in a year, it would be helpful, she suggested.
MR Kumar, chairman, Life Insurance Corporation, said early intervention is needed to close the protection gap. Such gaps are there in all lines of insurance, but are more prominent in the life, health and pension businesses, Kumar said. The trinity of life, health and pension need to be looked at differently to ensure their restorative powers to reduce economic and financial shocks caused by pandemic and catastrophe, he said.
Social welfare schemes have played a huge role in reaching out to the bottom on the pyramid, Kumar said. The Ayushman Bharat health insurance scheme has helped 2.18 crore people access free hospitalisation. The country needs to work on better distribution of insurance with new distribution entities such as common service centres and points of sale to grow the business and fast-track insurance penetration, he said.
Kumar said the FMCG industry has shown that rural distribution can prove to be a viable business for the insurance industry. Digital orientation, low cost and simple products can fast track the insurance penetration in the rural areas, he said.
G Srinivasan, director, National Insurance Academy, said there is a 90% protection gap in the country and there is an urgent need to plug the increasing uninsured economic losses and loss of lives. “The intensity and frequency of natural calamities have increased manifold, but still only 10% of the total losses are covered,” Srinivasan said.
Only 5% of people have home insurance, 12% have health insurance, three crore small industries remain uninsured and very few have cyber insurance cover. There has also also an increase in natural calamities and emergence of other risks such as the climate change risk, he said. Cyclones are more frequent on both coasts, something not seen in the past, especially on the west coast, he said.