Lessons from the insurance sector could help other sectors
₹46,000 crore in premium collections transform into one with 57 mostly-private insurers today with ₹9 trillion in premiums. Our insurance penetration is at 4.2% of GDP in 2021-22, low compared to 7% globally. Certain risks remain un-insurable or insurable at prohibitive premiums, while cyber and data breach risks are inadequately addressed.
In health, coverage of pre-existing conditions and the use of demystified standard policies have been initiated, but chronic conditions, specialized care and mental-disorder coverage remain deficient. So also awareness of essential covers, customer rights and uninsurable-risk, although central schemes have included weaker sections. The reinsurance business is nascent.
Investment regulation tweaks could allow wider capital-provisioning-backed risk-return choices, which would help deepen capital markets, especially for long-term debt. Draw on our reform experience: A plan to address insurance gaps can emerge from our current approach, which has been driven by an empowered regulator focused on outcomes over prescriptions, ease of market entry and space for innovation, apart from capital adequacy, financial prudence and consumer protection. Use-and-file products (as opposed to pre-approved), broad limits on expenses, an open distribution architecture, a tech outreach for e-insurance, digital distribution and cyber-security have been key milestones.
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