Micro-Insurance in India: Trends and Strategies for Further Extension
This paper provides an overview of the prospects of micro-insurance in India, and suggests strategies for its further extension.
Analyzing the early evidence on micro insurance, the paper also highlights the current initiatives being contemplated to strengthen micro-insurance activity in the country.
The authors study the developments on the supply side of micro insurance and observe that:
- Of the 80 listed insurance products, 45 cover only a single risk;
- Private insurance companies have more products than public companies;
- The available products cover a wide range of risks;
- Most of the health insurance products exclude pregnancy related illness etc.
The authors assess the developments on the demand side of micro insurance and observe that:
- 51 schemes are listed, with almost all being in the nascent stages;
- Nearly all insurance schemes are linked with microfinancial services;
- Life and health are two most popular risks for which insurance is demanded.
The paper provides insights on the concept note of Insurance Regulatory and Development Authority (IRDA) on micro-insurance. It details IRDA's plans of introducing supplementary provisions to promote its intermediate model.
The paper discusses the two areas that would aid the development of micro-insurance:
- Flexibility in premium collection;
- Encouraging micro-insurance among micro-finance institutions (MFIs).
The paper concludes with a recommendation that micro-insurance needs a further push and guidance from the regulator as well as the government.
