New Delhi: With expected high economic growth and increasing per capita income, India is likely to witness a gradual cut down in life, health insurance and pension protection gaps over the next few years. For an emerging economy, protection gaps may pose multiple problems, according to India's largest insurer, Life Insurance Corporation of India (LIC).
"India would definitely see a gradual reduction in life, health insurance and pension protection gaps over the next few years given the several positives in the economy and tailwinds for the financial sector as a whole," said M.R. Kumar, chairman, LIC of India and chairman, National Insurance Academy (NIA) governing board, while addressing a recent insurance summit.
Emphasising that insurance is a tool to reduce the shocks of natural calamities and pandemics, Kumar said that accessibility, affordability and lack of insurance awareness are the key areas to work upon to reduce the prevailing protection gap in the country. "Closing the protection gap creates a huge potential for the insurance sector," he said.
Social security schemes like Jan Dhan-Aadhaar-Mobile (JAM) trinity for very efficient, speedy and reliable on-boarding, regulators' push for standardised products and the launch of the largest social health insurance plan Ayushman Bharat are some of the critical initiatives for addressing the protection gap, he said.
The LIC chief emphasised that micro insurance, group coverage and flexible pension plans can play a major role in add-ressing protection gaps visible in the underserved sections and regions. "An early intervention in addressing the protection gap problem also means collaborating on solution orientation," Kumar said.
It has been observed that the trinity of life and health insurance and pension products possesses immense restorative powers to reduce the economic and financial shocks affecting the well-being of a household, especially those arising out of events such as natural calamity or a pandemic, and not just from the death of the breadwinner or loss of income due to incapacity.
"But not all men, women and sections of society are fortunate enough to understand and appreciate this well," he said, adding that they probably would get subjected to utter poverty in the absence of insurance protection. He exhorted the insurance industry to jointly take ownership of the challenge.