The insurance sector has only 2% penetration in Indian market largely to the fact that Indians see it as an avoidable expenditure. Many in India don’t see the urgency to get insurance policies. A majority of Indians still reside in rural areas or lesser developed towns where awareness is restricted. Large percentage of illiteracy still prevails in major parts of India. In order to penetrate deeper in the Indian market the insurers need to spread awareness among the ‘centers of influence’ i.e. the ‘village sarpanch’ in case of villages. Centers of influence can be different for different people. People mostly get influenced by people on whom they have trust. For some they can be their family and friends as well. Many people in India still don’t bother to buy essential insurance policies like health insurance. Reasons can be many but one of the most common reasons is that people don’t find the urgency to buy an insurance policy. India is still a developing country and there is large inequality of income spread. A large number of people somehow manage to pay bills and any money left after paying bills is mostly spent on leisure or savings in banks (mostly). Having an insurance policy like term insurance or health insurance is still thought of as a luxury. It is seen in case of motor insurance that people in order to avoid challans or fine get only third party insurance as it is mandatory. They don’t take comprehensive motor insurance policies that cover their own vehicle as well. The whole ideology is to save or avoid paying premium even if they are exposed to a higher financial risk. Many people mostly in second and third tier cities where traffic checking is less strict than a city like Delhi don’t even bother to get third party or liability insurance done for their vehicles. The defaulters are obliged to be penalized heavily. Still, in order to avoid paying premium they don’t get it done. And there are many others who still don’t trust that their claim would be paid by the insurance company when the need arises. Maybe they have seen or witnessed cases where claims have been rejected by companies. There can be faulty or fraudulent claims by the policyholder. The governing body IRDA ensures that all legitimate claims shall be settled. One can always take judiciary help in disputed cases. The fast track insurance redressal system provides good justice.
Although the scenario has been changing post liberalization with the advent of many private players in the Indian Insurance market space there are still paths left to be unblocked. Some of the world’s largest and most reputed insurance companies partnered with Indian corporate houses have ventured in India. They have brought international expertise and know how in the country. With aggressive advertising and transparent disclosures the insurance industry is expanding. It is still in a very nascent stage. There have been major alterations and modifications in handling the various intermediaries in the insurance sector to make insurance selling fairer and more convenient. The easier accessibility of the internet and rage to buy everything online among the masses has seen the birth and exponential rise of online insurance policies being offered by various insurers.
A lot of awareness and trust is still to be spread among the Indian masses to encourage them to be adequately insured. Insurance is an extremely importance risk management tool. Not being insured or being underinsured is a major risk. Being adequately insured gives a person a sense of self sufficiency and confidence to face adversities. This message has to be scribbled in the Indian psyche. Insurance is not a mere tax saving scheme rather it is the most trusted confidant that would come to aide in the most desperate times. With more education and fair trade practices one can hope to see a fair insurance market penetration in the country in times to come.
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