30% in Tier 2 & 3 cities have insurance policies, motor cover most common, says survey on Insurance Awareness Day

National Insurance Awareness Day: A recent survey has found that 30 per cent of people in Tier 2 and Tier 3 cities currently own an insurance policy, which has significantly gone up since Covid-19. The Covid-19 pandemic brought the importance of insurance to the forefront of public consciousness.  June 28 is observed as National Insurance Awareness Day, wherein people are made aware of the benefits of investing in an insurance plan.  

According to the survey conducted by BajajCapital, among the various insurance types, motor Insurance was the most common, with ownership of 60 per cent for two-wheeler, 35 per cent for two-wheeler insurance, and 5 per cent for commercial vehicle insurance.  

Health insurance was next in line, with 40 per cent having individual health insurance, 50 per cent opting for family floater health insurance, and 10 per cent owning critical illness insurance.  

Life insurance is owned by 60 per cent of policyholders taking up whole life insurance/endowment plans, 30 per cent opting for term life insurance, and 10 per cent choosing unit-linked insurance plans (ULIPs). 

Talking about the importance of insurance after the Covid-19 pandemic, Raghavendra Rao, Chief Distribution Officer, Future Generali India Insurance Company, said: “The Covid-19 pandemic has brought the importance of insurance to the forefront of public consciousness. The outbreak has highlighted the critical role of insurance in managing unforeseen risks. Health insurance has played a vital role in covering medical expenses and providing access to quality healthcare during these challenging times. Similarly, business interruption insurance has helped organisations weather the storm by compensating for lost income and enabling them to rebuild and recover.” 

The survey findings further stated that other insurance types, such as property insurance, travel insurance, business insurance, and agriculture / crop insurance, have seen varying, still very minimal levels of ownership. 

It stated that only 10 per cent of respondents currently own property insurance, while travel insurance and business insurance have ownership rates of 5 per cent each. Additionally, agriculture / crop insurance has the lowest ownership rate, with just 2 per cent of respondents having such coverage. 

Talking about insurance being an essential part of financial inclusion and is essential for protection and progress, Rakesh Jain, Chief Executive Officer, Reliance General Insurance, said: “Unlocking insurance penetration in India requires a multi-faceted approach. We must collaborate with stakeholders to raise awareness about insurance, tailor products to suit diverse customer needs, and leverage digital platforms for wider accessibility. By bridging the protection gap, we can build a financially secure and prosperous nation for all."

Echoing similar sentiments, Bhargav Dasgupta, MD & CEO, ICICI Lombard GIC, said: "On National Insurance Awareness Day, we recognise the crucial mission of increasing insurance penetration in India. In a nation brimming with potential and opportunities, awareness and understanding of insurance play a paramount role. The visionary reforms set in motion by IRDAI have brought forth transparency, consumer-centric practices and accessibility- ultimately fostering trust." 

IRDAI’s steps 

Insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has recently said it will be planning to improve insurance awareness and penetration in the hinterland by issuing draft guidelines for Bima Vahak, which is a dedicated distribution channel to reach out to every Gram Panchayat. 

With an eye on ‘Insurance for all by 2047’ goal, Bima Vahak are expected to be the crucial last mile connect for insurers in the form of a field force comprising corporate as well individual Bima Vahaks with a focus on onboarding women who can gain the trust of locals for the distribution and servicing of insurance products. 

According to IRDAI's guidelines, “Following this objective will improve accessibility and availability of insurance in every nook and corner of the country.” 

These Bima Vahaks’ work will range from the collection of proposal information, KYC documents and submissions to coordination and support in policy to claims-related servicing.   

Also read: When and why you should invest in guaranteed returns insurance plans

Also read: These life insurance companies announced their highest-ever bonus for policyholders. Find the details here

Also read: After Cyclone Biparjoy, insurers start receiving claims