The Associated Chamber of Commerce and Industry of India (ASSOCHAM) in a paper titled ‘Insurance Penetration in India’ revealed that the insurance penetration in India will go beyond the 4% mark by the end of this year. The rise in the penetration became possible due to the government’s policy of insuring the uninsured in the country.
The insurance penetration has increased from 3.3% in 2014 to 3.44% in 2015 due to the many insurance schemes launched by the government. The affordable insurance schemes with low premiums launched by the government have boosted the penetration. However, the same paper mentioned that despite the slight increment in insurance penetration, it is well below the global average.
The government launched schemes including the Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) with an objective to provide insurance coverage to all. The PMSBY, which is managed by general insurance firms, provides a renewable one-year accidental death or disability cover of ₹2 lakh for partial or permanent disability for an annual premium of ₹12.
Besides, the government launched the crop insurance scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY) to financially support farmers facing crop damage arising from unforeseen events. The scheme is an improvement of previously existing agricultural schemes. The government has also allocated a budget of ₹ 5,501 crore for the scheme for the current crop season.
Another significant scheme launched by the government is the Rashtriya Swasthya Bima Yojana (RSBY), which provides cashless hospitalisation in public and private hospitals. 36 crore people, almost 30% of India’s population had already been covered under the scheme during 2015-16. The number went up from the previous 28.8 crore in 2014-15. The per capita premium has gone down considerably due to government schemes, which is one of the major factors in the rise of insurance penetration.
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