How Microinsurance can help the Indians achieve financial freedom
India is celebrating 75 years of Independence, it’s indeed a proud moment for all Indians. However, at a personal level, one cannot attain mental peace until they are financially independent and free from the worries of future uncertainties. Financial freedom can only be achieved with proper financial planning. Every individual needs to secure their family’s future against unforeseen circumstances. Freedom from future worries is absolute freedom of mind! After all, a happy life with a secured future is what everyone wants for themselves and their families. Insurance is a necessary tool to facilitate financial independence. It is safeguarding one’s economic well-being by securing them against unforeseen risks. Over the past 75 years, the insurance landscape in India and across the world has changed rapidly. Yet, there exists a huge insurance protection gap especially when it comes to economically vulnerable sections of our society.
75 years of Insurance History in India
The history of insurance in India dates back to 1818 when the Oriental Life insurance company started in Kolkata. Till January 1956, before the nationalization of the Life insurance sector in India and the formation of the Life Insurance Corporation, 245 Indian and foreign life insurers existed in India. Untill 1972, the general insurance sector was represented by 107 insurers.During the nationalization of the General insurance sector, these general insurers were amalgamated into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd, and the United India Insurance Company Ltd. After decades of tremendous growth in the insurable population and assets, the insurers still have limited reach. The insurance protection gap is huge in rural areas. Currently, India has 24 life insurance companies and 28 general insurance companies, which may not be enough to tap the potential markets. With the current insurers' focus on the urban markets, we are still far from achieving financial inclusion and financial freedom for a major chunk of our population.
The majority of large insurers find it difficult to reach the economically marginalized population due to various factors like profitability, accessibility, customization, and scalability. However, microinsurance offers a perfect solution for the financially weaker section of society, protecting those not covered by traditional insurance plans or state-sponsored schemes. Microinsurance is a specific section of insurance that caters to a financially weaker section of society by offering limited protection for a small amount of premium.
Microinsurance: Bringing financial freedom to lower income groups by curating need-based products
The unique value proposition of Microinsurance is the need-based flexible products, simple processing, quick settlement, and affordable pricing. Microinsurance covers a wide range of risks, specific to the low-income groups working in unorganized or rural sectors. The microinsurance policies can secure the lives and livelihood of the low-income groups by addressing the five key uncertainties.
- 1. Death
- 2. Disability
- 3. Dismemberment
- 4. Disease
- 5. Destitution
These unforeseen circumstances can result in the family losing their livelihood and income. Consequently, leading them to a never-ending cycle of poverty and deprivation.
Tapping the potential market
Unlike the growth and reach of microloans and micro-saving institutions, the Microinsurance sector still has a long way to go. Despite the growth of microinsurance in developing and emerging countries in the last few decades, its availability is still limited. The factors like lack of awareness, lack of trust, and lack of accessibility further add to the challenge. Perhaps the need for an hour is to have more players in the market specializing in the Microinsurance segment. The advancement of Technology, including the IoT, telematics, 5G, AI, and Big data analysis, has the potential to transform the microinsurance sector and help it penetrate the untapped market faster.
On this 75th Independence Day, the MicroNsure family takes a pledge to promote and bring financial freedom to the economically weaker section of our society.
Happy 75th Independence Day to all the fellow Indians!
About MicroNsure
MicroNsure is a technology-driven Microinsurance consulting and distribution company. We are committed to bringing financial inclusion to the economically vulnerable section of our society by offering simple, hassle-free, and affordable microinsurance solutions. To know more about our products do write to us at madhulika@micronsure.com
Disclaimer
Insurance is offered by Svojas Insurance Broking and Risk Management Services Private Limited (CIN U67120TG2017PTC118828). IRDAI Broking License Code No. DB 718/17, Certificate No. 627, License category- Direct Broker (Life & General), valid till 09/11/2023. Insurance is the subject matter of the solicitation. Product information is solely based on the information received from the insurers. For more details on risk factors, associated terms and conditions, and exclusions, please read the sales brochure carefully of the respective insurer before concluding a sale. For more information on Svojas Insurance Brokers visit www.svojasinsurancebrokers.com
