Recently, a market research was conducted by Insurance Regulatory and Development Authority (IRDA) on the need of insurance in India. Conducted by the NCAER, this research covered 30, 200 households across India. Considerable thought went into ensuring that the samples represent the entire nation and the inferences drawn can be benchmarked to an identical survey carried out in 2010.
The research aptly reveals how people in India perceive insurance products. A lot of areas have shown a remarkable progress, but a lot more is needed to be done to get insurance products more popular amongst Indian nationals. The government, industry and the regulator have a full schema for many more years ahead.
The understanding and awareness of life insurance have made remarkable improvement, over the past a few years. Over 83% of urban households are now aware of life insurance and its benefits. Over 75% of the insured urban population says that life insurance acts as a compensation for the loss of life. This proportion, five years ago, was 51%. There has been a sharp decline in the number of people who considered life insurance as a compensation for rebuilding of assets or damages. Now, life insurance is increasingly seen as a protection and savings tool.
There are a few implications for the policymakers. The first is that life insurance is the most imperative financial planning tool. It is vital that the insurance products are fair to the ones who are buying these products and customer expectations are clearly laid down. The second implication is that there must be a gap between the need of the buyer of the product and what they get from it. This is depicted by the gap between the actual sale of term life insurance and its awareness. Awareness of term insurance is more than 50%, but these actual sales are restricted to single digits for most insurers, in terms of actual sales.
For the Indian insurance sector, the business opportunity stands out. Awareness levels of insurance and its need have significantly elevated than the actual penetration. The key challenge is to thoroughly identify the obstacles to penetration and push it forward. The answers are probably to be in the design of the product and cost-effective allocation partnerships.
Like any other industry, data can be arranged to rationalise the opinion in this industry too. That is where the association or company-sponsored research often goes wide off the mark. However, the report by NCAER is meaningful as the regulator sponsors it. In addition, the study has been conducted independently and is arranged in a manner to permit the progress comparison over time. The subsequent step would be to focus on regulation and concerns that need to be improved according to the report. A constant focus is needed on the introduction of insurance products to meet the protection needs of the individuals, encouraging a deeper comprehension of health insurance features and benefits, escalating responsiveness of home insurance and grievance redressal procedures.
