‘India needs far deeper penetration of Insurance sector for balanced economic growth’

‘India needs far deeper penetration of Insurance sector for balanced economic growth’

Kolkata, June 09 (HS): As the penetration of both life and non life Insurance coverage in India is far less than the developed and most of the developing countries of the world, Tajinder Mukherjee, the Chairperson and Managing Director of Kolkata headquartered National Insurance Company Limited (NICL) underscores the need for implementing a ‘vanilla cover with simplified clauses and conditions so that consumers can have clarity in understanding insurance schemes particularly those related to property and health’.

Addressing members of the century old Bharat Chamber of Commerce (BCC) at a Special session on ‘Insurance Sector: Leveraging India’s Economic Growth’ here, Mukherjee expressed views about the role and relevance of the Insurance sector in driving India’s economic growth.

Speaking on the current scenario of the Insurance sector, worth more than Rs 50,000 crores in general, Mukherjee informed that the insurance sector in India consisted of 63 insurance companies, of which 24 were in life insurance business and the remaining 39 were non-life insurers.

“It effectively pools and transfers risk from individuals and corporates encouraging investments and driving GDP growth”, she said and claimed that it was a major contributor to employment, providing jobs to more than 7,00,000 people directly and indirectly.

Referring to the relevance of insurance as a means for securing assets, the NICL Chief, however regretted that in spite of several attempts by successive governments the penetration of the sector in India continued to remain very low compared to developed and most of the developing countries both in terms of Penetration and Density, which currently hovered around only about 4 per cent both in terms of life and non life products.

“Increased insurance penetration is likely to lead to better insurance coverage and subsequently a reduction in the level of damages and recovery cost which falls on the government and therefore the tax pay”, she observed.

Underscoring the need for more capital infusion in the sector for ensuring and maintaining at least 17 per cent year on year growth of the sector, Mukherjee informed that NICL had already sought fresh capital from the union government to carry forward the momentum of growth for public sector insurance companies. She, however, refused to disclose the amount she had sought from the government for NICL this year because of policy decision.

On the possibility of merger of several Insurance companies into larger entities as desired by the government, the NICL Chief replying to queries from Hindusthan Samachar, said that she was very optimist that such an effort should take shape soon.

“I am open to the idea of merger”, she told HS replying to another query and hoped that following the installation of a powerful government at the Centre, the process would begin soon.

In the context to the new initiatives taken by the NICL, Mukherjee informed that they were working in close cooperation with the Government of India with respect to ‘Ayushman Bharat’ health scheme in several states including in Jharkhand.

In addition NICL was closely associated with the Maharashtra government for nearly ten years now, she said.

“In West Bengal we are also working with the government in terms of crop insurance”, she said and felt that Insurance being a highly capital intensive sector was highly dependent on the Government’s Crop and Health Insurance schemes for further growth.

Referring to BCC President Sitaram Sharma’s observation about ‘ease of doing business’, Mukherjee said that it could be made far more effective if the processes of availing a policy and a claim could be made in a less strenuous way. “Digitisation in this regard is a way forward”, she pointed out.

About the role of the Insurance Regulatory and Development Authority (IRDA), Mukherjee said  that it was preparing a study report on bringing parity among all companies for certain basic products.

“NICL intends to implement a vanilla cover with simplified clauses and conditions so that consumers can have clarity in understanding insurance schemes for products related to property and health”, she said and underscored the urgent need to reduce the GST rate for insurance from 18 per cent now to 5 per cent. “We have strongly advocated the need for reducing this rate to as low as 5% with the GST Council”, she added.