Home / Business and Economy / India Insurance: Reforms Boost Sales, Gap Remains
India Insurance: Reforms Boost Sales, Gap Remains
28 Apr
Summary
- Insurance reforms improve distribution but protection gap persists.
- Modular, usage-based products and premium financing can reduce lapsation.
- Alternative data needed for underwriting gig economy workers.
India's insurance sector has seen advancements in distribution through regulatory reforms, yet a substantial protection gap continues. Hanut Mehta, CEO of Bimapay, believes product personalization is key, advocating for modular and usage-based insurance. These tailored products could better serve diverse income patterns and risk profiles, especially for gig workers and first-time buyers.
Mehta emphasizes premium financing as a crucial tool to enable installment payments, thereby supporting policy continuity and reducing lapsation. This mechanism differs from general loans by directly linking to insurance policies. Traditional underwriting methods need adaptation, with suggestions to use alternative data for assessing the repayment capacity of informal economy segments.
While supply-side efficiencies have improved, demand-side challenges persist. These include product complexity and payment structures misaligned with monthly income cycles. For MSMEs, premium financing can ease working capital pressures. Embedded insurance within HR and payroll platforms offers further integration opportunities, automating deductions and improving policy adherence.
