India’s Amrit Kal: Paving the Way for Inclusive Insurance Coverage in Bharat

As the nation commemorates Amrit Kal, the ambitious vision to transform India into a developed country by 2047, various sectors are aligning their efforts to contribute to this goal. The insurance industry, under the guidance of the sector regulator, IRDAI, is actively working towards achieving the ambitious goal of "Insurance for All by 2047," ensuring that every individual has adequate life, health, and property insurance. It is also to make sure that the enterprises particularly the #MSMEs receive the necessary insurance solutions for risk management & sustainable growth.

India's progress is intrinsically linked to the upliftment of its rural economy in which insurance has a big role to play. It has the potential of stopping people going below the poverty line , should there be an event resulting in to financial loss in terms of lives or property. Recognizing this, the insurance sector is striving to extend comprehensive coverage to rural communities.

In brick-mortar model of insurance distribution , the real challenge in rural area was that of cost of acquisition & servicing. Offering small ticket size insurance cover was not financial viable for insurance companies. No wonder , many private companies preferred paying penalties for not doing mandatory rural business for years.

The last decade has been phenomenal in terms of digital disruption more so in banking , financial services & insurance domain. Riding on the ever improving internet Connectivity ,huge untapped potential of Cooperative institutions and the Collaborative Products , it is very much possible to reach to the nook & corner of our country now. This can very well be termed as “3 C” model.

Connectivity: Empowering Rural Outreach

In the digital era, robust internet and mobile connectivity have become indispensable for progress. The government has undertaken significant initiatives to ensure that villages are seamlessly connected. The Ministry of IT has already commenced laying optical fiber cables to provide high-speed internet across rural India. Mobile networks, including 4G, are already in place, and plans for 5G and 6G are in the pipeline. Digital finance / payment has become a part of our lives.

This digital transformation is revolutionizing insurance services, enabling online product launches, policy sales, customer assistance, and claims processing. Additionally, digital channels like Common Service Centers (CSCs) and Point of Sales Persons (PoSPs) are poised to play a critical role in further expanding insurance accessibility. Even payment platforms such PhonePe , Google pay etc are offering insurance covers at a click of button.

Cooperative Institutions: Strengthening Rural Infrastructure

India’s rural landscape is supported by an extensive network of cooperative societies. These institutions can be instrumental in increasing insurance penetration if leveraged efficiently. A major push from the Central Government came last year when Ministry of Cooperatives announced an allocation of Rs 6,500 crore to enhance IT infrastructure for these societies.

The possible transformation of over 65,000 cooperatives and Primary Agricultural Credit Societies (PACS) into an extended insurance sales and service units could be a game-changer. This move will facilitate the provision of financial services, including insurance, at the grassroots level, ensuring digital accessibility for rural populations.

Few days back while speaking in Parliament , Mr. Amit Shah, Hon’l Minister talked of bringing cooperative insurance soon in India , which would put all these pilot projects on jet mode.

Collaborative Products: Tailored Solutions for Diverse Needs

The traditional, rigid insurance policies dictated by sellers are giving way to customized, consumer-centric solutions. The rise of insurtech startups has enabled the creation of flexible and need-based insurance policies, making them more accessible and relevant for rural consumers.

In this context , the concept of embedded insurance can help a lot in bringing insurance safety net to all concerned. In this arrangement , a relevant & linked insurance coverage is seamlessly get integrated into purchases of assets / goods, ensuring comprehensive risk coverage. For instance, a Non-Banking Financial Company (NBFC) can bundle cattle insurance with livestock loans, while personal accident policies can be linked with agricultural purchases such as fertilizers. The purchase of a threshold volume of building material can arrange instant home insurance. This evolving trend is rapidly reshaping the insurance landscape, making coverage more inclusive and widely accessible. The transactions through digital mode is keeping the operational cost at bare minimum.

Regulatory Push Towards a Secure Future

In recent past the sector regulator IRDAI has started three initiatives known by name Bima Trinity to give a push for expansion of insurance. Bima Vistar is all about having a composite insurance product covering life , hospitalisation & home that too at a affordable premium to relieve people from taking / maintaining multiple policies. Bima Vahak is about inducting females in distribution line to sale such simple policies in rural belt. The much ambitious Bima Sugam is about democratising the sales & servicing of insurance products by bringing all stakeholders at one platform. If implemented properly , it would be like a Amazon / Flipkart / ONDC moment for insurance industry.

The amalgamation of all these initiative & adoption of “3 C” model is set to redefine India’s insurance ecosystem, particularly in rural areas. As the country strides toward its Amrit Kal objectives, these strategic initiatives will play a crucial role in ensuring financial security and stability for all citizens, laying a strong foundation for a developed India by 2047.

Prof Manoj K Pandey is Associate Professor in BIMTECH

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same