“Every sale has five basic obstacles “no need,
no money, no hurry, no desire, no trust” – Zig Ziglar
India is currently witnessing an impressive economic and industrial growth, registering remarkable GDP growth of about 6.4%. In tandem, the insurance sector has also been recording burgeoning growth over the past few years. In fact, one can clearly perceive the renewed vigour and the bustle of activities in the insurance field triggered by volley reform measures initiated by the Insurance Regulatory and Development Authority of India (IRDAI) and the introduction of several innovative, customer centric and cost-effective insurance products by the insurers. It is now apparently perceptible that IRDAI along with insurance industry is making all out efforts with an unwavering determination to achieve the ambitious goal “ INSURANCE FOR ALL BY 2047” inasmuch as the Authority, obviously with the intent to prod the industry stakeholders to march in unison, has launched several programmes including comprehensive, strategic framework “Bima Trinity” , a three pronged approach viz; Bima Sugam Bima Vistar and Bima Vaahak, lifting the cap on Foreign Direct investment (FDI), enhanced policyholder protection, and measures to overhaul distribution system including introduction of perpetual intermediary registration. The Authority, it is said, is also contemplating composite licensing allowing insurers to operate across multiple lines, capping of commissions to intermediaries, adopting AI in business and preventing mis-selling of insurance products. These measures along with series of steps to increase insurance awareness among the rural population are expected to bring about significant transformation in the sector and will facilitate spread of insurance far and wide in the countryside which space has hitherto remained largely eluded, thus to proceed resolutely to achieve IRDAI goal of “Vision 2047”. “Bima Trinity”, a wholly digital framework, is a three-pronged approach consisting of the following components:
Bima Sugam: A centralized, digital insurance marketplace that integrates all insurers and intermediaries into a single platform. It serves as a one-stop shop for customers and intermediaries to freely access the digital content, easily identify, analyse and buy insurance policies, manage, renew policies, and process claims.
Bima Vistaar: A bundled, affordable insurance product covering life, health, accident, and property risks. It is designed with standardized, predefined benefits to simplify choices and ensure rapid claim settlements.
Bima Vaahak: A localized, women-centric field distribution and servicing force designed to expand rural insurance reach focused on women empowerment and financial inclusion in rural and semi-urban areas.
Cautious optimism: Even so, let us be mindful of the fact that the pathway to the goal of “Vision 2047” is not free from the familiar hurdles that have always bedevilled the insurance industry. The key challenges facing the country’s insurance industry today, as before, are low insurance penetration, supposedly due to factors like high customer expectations, mis-selling, a trust deficit between insurers and the public, monetary constraints, and certain prejudices and stereotypes nurtured by customers. As per Economic Survey 2026, Insurance penetration declined to 3.7% of GDP in 2025 against the global average of 7%. India is known to be the 9th largest life insurance and 14th largest non-life insurance market and still holds much scope for tremendous market expansion. Despite industry’s continued growth of about 17% YoY, the country’s insurance penetration remained almost static. An inquiry into the possible reason for this state of affairs reveals that the demographic, social, and economic factors play important role in obstructing the spread of insurance. According to recent Government estimates, approximately 65% of India’s population lives in rural areas of which 60% depends on agriculture and allied sectors for their livelihood. Insurance does not seem to be a priority for this section of the population. According to data from People Research on India’s Consumer Economy, the middle class in India makes up about 40%, 50% of this group lives in rural areas and the rest in semi-urban or urban areas. Poor accounts for 24% for whom government-sponsored programmes like Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and other Jan Suraksha Schemes are available. Briefly, about 40% of population who live in rural and semi-urban areas remain uninsured, perhaps on their own volition, due mainly to the reason that they are unappreciative of or oblivious to the concept of insurance. This phenomenon had prompted IRDAI in the past to implement various reform measures with a view to enhancing the reach of insurance to wider areas of the country. Attempts were also made to identify the specific sections of the populace who are either unaware or apathetic about insurance, and try to educate them about the efficacy of insurance as a tool of financial protection. Simultaneously, special insurance programmes catering to this section of the population dwelling mainly in rural or urban areas were introduced and widely propagated. Rural insurance schemes with affordable specialised coverages designed for farmers, artisans and rural households such as livestock insurance, hut insurance, agricultural pump set insurance, tractor insurance, farmers package, etc. were widely publicised and marketed under the aegis of co-operatives and various local authorities. Unfortunately, the enthusiasm generated by all this action was short-lived; before long, the usual ubiquitous aversion to the concept of insurance set in. In fact, hardly any attitudinal change could be brought about by these efforts. So, it is not that no meaningful attempt has ever been made in the past to improve the spread of insurance to remote areas of the country. An old saying, “you can lead a horse to water but you cannot make him drink” serves to aptly describe the idiosyncrasy of this section of the population.
Nevertheless, with collective efforts of IRDAI, insurance companies and intermediaries; IRDAI by initiating various reform measures, blitzkrieg of publicity, and insurers by introducing affordable insurance covers, creating digital platforms for sale of insurance products, strengthening the marketing wing, offering cheap and attractive insurance products, etc., a notable improvement in the insurance awareness among this section of the population is now discernible. With enhanced digitisation of banking and government services, rural populace has become increasingly tech-savvy. Bima Sugam is a digital insurance market place designed to enable and encourage the general public, especially the rural population, to easily access its digital content to avail wide-ranging insurance services including claim process. However, because of their typical closed mindset, which is almost impermeable to any type of suggestions for insurance, hardly would any persons take initiative to use the facility himself to buy an insurance cover. Besides, there is also the possibility that the proposed digital algorithmic claims management, at times may turn out to be disgusting to the customers because of the total absence of human face in the process and the resultant feeling of helplessness, which causes an irremediable revulsion in the mind of customer.
Monetary constraints: As per Government data, approximately 65% of the country’s population lives in rural areas and majority of them is engaged in agriculture and allied activities. The average monthly income of rural household is estimated to be Rs.12,600 according to All India Rural Financial Inclusion Survey (NAFIS) comparing to the average monthly income of $5000 in USA/UK. Appreciably, India’s position is 4th in world GDP ranking with estimated GDP growth rate of 6.4% which is remarkable but in contrast, the average per capita GDP is USD 2934 which is the lowest among top 10 countries (IMF World Economic outlook data). As per recent reports, approximately 50% of India’s rural population have health insurance cover and 22% is covered by life insurance products. Curiously, majority of this section of the populace are covered by Government programmes like Ayushman Bharat PM-JAY offering Rs.5 lakhs for hospitalisation, Pradhan Mantri Suraksha Bima Yojana (PMSBY) for accidental cover and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) for life insurance. Due to the monetary constrains and the typical social conditions in which they live, this section of the population is totally inconsiderate about insurance as for them it is not in their priority list. The expectation is that once more money comes into the hands of these people, they can be convinced to set aside some fund for insurance. But the question is “does GDP growth guarantee increased individual income?”. Not necessarily. India’s GDP growth story explains the position. On the contrary, this section of population seems to innocently but strongly believe that if any unfortunate event happens to them affecting them financially or otherwise, it is the duty of the government to come for their rescue providing necessary financial protection and social security, an idea firmed by the history of Government actions mostly driven by political activism.
Mis-selling: Mis-selling in its varied forms such as over-promising, obfuscation, emotional sales pitch, and so on, is rampant in insurance industry. Each mis-selling creates an aggrieved customer, a detractor perhaps and such detractors are the bane of the industry. Bima Trinity, the digital framework, is designed to obviate mis-selling as the system helps individual customer to access it freely to avail of all types of insurance services directly without having to rely on the services of an intermediary. Here again, the worry is that, given their typical attitude, customers’ initiative will be found largely lacking.
Utmost adhocism of insurers: Most often it is found that the insurers react impulsively and whimsically to any reform measures initiated by IRDAI which ultimately creates a trust deficit between customers and insurers. A recent incident illustrates this. In its ease of doing business initiative, the Authority recently announced its decision to allow insurers freedom in fixing the prices for their insurance products. Insurance is a tertiary service which provides intangible value; therefore, pricing insurance products is a complicated process requiring meticulous analysis of historical data and the real-time experience. In 2009, IRDAI formed the Insurance Information Bureau (IIB) a prestigious institution serving as a data analytics and repository which provides underwriting and claims data to insurers for their use in business. IIB soon released industry-wise burning costs for non-life insurance so that each insurer could formulate a reasonable rate based on this burning cost, factoring in normal administration costs and profit. Curiously, instead of fixing their own risk-wise premium rates based on their underwriting and claim experience, insurers glibly chose to take the IIB’s burning cost as their final risk rate. This action of the insurers triggered public criticism of surreptitiously reintroducing old tariff pricing. As if to pacify the customers, the insurers subsequently resorted to huge discounting on these rates under the pretext of pressure of market competition. Now, following IRDAI’s decision of non-interference in product pricing, insurers seem to have lost all control and are gleefully quoting rates at a 100% discount for property insurance thereby charging virtually no premium for basic fire insurance cover which includes 12 named perils. The result is a substantial reduction in fire insurance premiums earned by insurers. Since such market competition is mainly confined to corporate business where chunk of premium is involved, big corporates reaped the benefit, to the exclusion of SMEs who are left high and dry. This type of erratic and irrational behaviour by insurers raises customer scepticism and creates a serious credibility gap. Insurers’ accepting huge risks without charging sustainable consideration is certainly not risk underwriting and no prudent underwriters would do so. Interestingly, this is not a one off case; all players in the non-life sector were aggressively grabbing business by undercutting premium as though there is no tomorrow. Doesn’t the insurers’ behavioural pattern show that India’s insurance industry is not yet mature enough? The wary customer is now more confused and asks, “Were the insurers looting the public by charging exorbitant premiums until now?”
Odds are many, the goal to be achieved is distant and the pathway is intricate but all this can be surmounted and the goal attained with concerted efforts by all concerned supported by necessary government initiatives and aided by intensive awareness campaigns especially in targeted areas. Success, however, depends on how effectively the unconducive situations prevalent in the countryside are addressed.
Authored by:
K.Govindan
CEO & Director
Insutech Insurance Broking
Servces Pvt.Ltd., Ahmedabad
