Although purchasing general insurance coverage is standard in developed nations, many people in developing economies still view it as a luxury. India, the world’s most populous country, has a negligible proportion of insured low-income individuals.
Only 35% of India’s population was covered by health insurance schemes in the financial year 2020, according to data provided by Statista. Government programs are more well-liked among those who are insured. As a result, the insurance industry and sector players suffer significantly from a lack of knowledge about “insurance schemes”.
To ensure that the general public had easy access to inexpensive and low-cost insurance products, microinsurance was introduced back in the 1990s. ##
What Are The Products Of Microinsurance?
The majority of MFIs use microinsurance products that are registered under the Microinsurance Regulation of 2005. Most of these products fall under the credit-life insurance category. Two broad categories can be used to categorise the products: microinsurance for life; and general microinsurance.
The potential for microinsurance is limitless, though, mainly because it allows low-income clients to customise their microinsurance products by disentangling complicated insurance products from the life, general, and health segments to suit their needs.
These goods may also be offered independently by local communities or in collaboration with insurance providers. Vector-borne insurance, COVID-19 insurance, Critical Insurance, Cancer cover, Personal Accident Insurance, two-wheeler insurance – Third party only, and Home-content only/Building covers are a few examples of microinsurance products.*
Advantages For Customers
Microinsurance was initially intended to help the economically disadvantaged segment. Still, it is now also used to give customers the freedom to select the types of coverage they desire and make an insurance claim. Customers may gain from microinsurance in the following ways:
- Because the premiums for stripped-down covers are much lower than those for traditional comprehensive insurance, they are free to purchase insurance at a lower price. ##
- Microinsurance coverage gives low-income people a sense of security by giving them access to risk-management tools to help them become less financially vulnerable under challenging times.
- Microinsurance allows people to purchase particular coverages rather than comprehensive health insurance.*
- Microinsurance products have fewer administrative hassles, quicker policy issuance, and little to no underwriting. They are also simpler to understand.
Advantages For Insurance Providers
- Since the sum assured offered by the insurers is equal to or less than Rs 50,000, microinsurance relieves both established players looking to increase their customer base and new entrants.
- Due to its adaptability, insurers can also offer customised plans to appeal to increasing customers.
- Because the premiums for microinsurance products are lower, insurers can increase revenues by relying on higher volumes and mass adoption.
- These insurers help underwriting efficiency and receive more data overall on customer profiling.
There is no disputing the fact that insurance provides stability in tumultuous times. The Covid-19 pandemic has affected the rich and the poor equally for the past two years. The necessity of ensuring businesses, life, and health has become abundantly clear due to businesses being closed for a noticeably more extended period.
Make sure you carry out the process of insurance renewal on time.
## All savings are provided by the insurer as per the IRDAI-approved insurance plan. *Standard T&C apply.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
