Awareness and affordability are two important areas which the insurance industry should work on to take insurance closer to the middle class, Mr Subhash C Khuntia, chairman of the IRDAI, says.
In an interview with Times of India, he says that the middle class consisting of 700m people is described as the “missing middle” in the insurance sector.
The insurance sector has been catering to the rich through commercial plans as well as low-income groups through government-backed insurance plans.
Mr Khuntia says that one way to reach the middle class is to extend government insurance schemes to the middle class with higher coverage, but without subsidy. Another way is to have standardised products to reduce confusion in choosing appropriate policies, he says.
Health insurance penetration
Referring to health insurance, he said, “Out of pocket expenditure on health in India is as high as 64%, whereas in developed countries, this figure is less than 20%. At present, health insurance is as low as 0.29% of GDP.”
He says that the design of simple and need-based products, using simple wording to describe terms and conditions, and quick claim settlement are the key areas for the insurers to concentrate on.
He indicated that the IRDAI has contributed towards this goal by, for example, mandating a simple, inclusive standard comprehensive health insurance product called “Arogya Sanjeevani”. This will help customers to opt for appropriate health insurance without getting confused about varying terms and conditions.
“We are also encouraging insurers to offer stand-alone products against vector-borne diseases like dengue, chikungunya, malaria and encephalitis,” he added.