Women do need insurance

Lot of people don’t understand the value of wife, until the judge decided the alimony amount”. This aptly summarises the way a life of a women and her contributions are evaluated, thus depriving her of her entitlement to a secure and financial independent life.

India has a population of over 1.2 billion and is amongst the fastest growing economies in the world. But  it still remains one of the many under-insured and un-insured countries in the world.

The insurance penetration in India (measure of Insurance premium over GDP) is a mere 3 per cent with an insurance density of around 28 per cent (Japan would have close to 100 per cent), we have a long way to go before we can boast of providing protection to the citizens.

As per studies, India’s insurable population is anticipated to touch 750 million in 2020, with life expectancy reaching 74 years. Furthermore, life insurance is projected to comprise 35 per cent of total savings by the end of this decade, as against 26 per cent in 2009-10.

The country has been independent for over 70 years and state-run insurance companies have been there for a good 60 years. LIC alone employs over 10 lakh agents and collects a premium of over a lakh crores every month in renewals. Liberalisation post 1991 has seen the introduction of 21 life insurers and over 25 general insurance companies in India that has accelerated the penetration, but continues to be at a very slow pace.

Despite this history, experience and collective wisdom and aggression of both private and state-run insurers in India, the penetration of insurance in India is at an abysmal 3 per cent.

So why haven’t insurance companies in India, in collaboration with their global partners and having access to best underwriting, distribution and investment practices, not been able to improve insurance penetration in India and provide a safety net to a social security deprived population.

“Life insurance is about underwriting the perception of financial loss and mitigating the risk by putting a value to life. Not everyone in India is insurable as not all life lost results in financial loss,” says an industry expert, and adds, that it is, therefore, relevant to see how companies are reaching out to the segment that is insurable and offering them products.

Before we elaborate into the insignificant presence of women focus mainstream insurance products, and its impact on society, let’s understand “not everyone is insurable” remark and why do people not take insurance.

Firstly, India has historically been embracing the “joint family” culture where the social security was provided by being part of the joint family and any untoward incident and loss of life was hidden behind the veil of the family with everyone contributing to the wellbeing of everyone. This provided such strong support system that an external insurance for well-being was neither necessary nor encouraged. Joint family, thus, was insurance in itself, as value of life was not appreciated outside the family.

Secondly, as a dominant agrarian society, the livelihood of a family depended on the land and its harvest. A loss of life, unless in a nuclear family, did not result in financial loss as the land was tilled by some other member ensuring the continuance of livelihood and finances.

Thirdly, life insurance companies work for profit, commercial gains and to generate favourable mortality experience over the years. This requires companies to set minimum premium, ensure regular payment of premiums, reduce costs and build economies of scale. Minimum premium and regular payment itself eliminates a large chunk of our population from getting insured. A thumb rule indicates that about 10 per cent of income can be given towards insurance. People with no secured and regular income, therefore, get opted out from the cover.

Fourthly, lack of trust on insurance companies play an important role. LIC remains the most trusted company till date and the LIC insurance agent remains a trusted member of the family in most cases. Insurance companies today are governed by the same rules and regulator, but the trust that has been built by LIC over the years still takes the lions share amongst investor.

Mis-selling to gain market share has played an important role — though it accounts for 3-4 per cent of policies sold — in retracting the awareness and confidence built by these companies over the years.

Lastly, is the absence of women insurance in the sector that misses out nearly 50 per cent of the population from the protection provided by the sector. Today a mere 3 per cent of Indian women, mainly working women, are insured.

“In our LIC days decades ago, there was an unwritten rule not to provide heavy insurance cover to women members. This was for their safety. Also, being a conservative society, we also didn’t know who was actually signing the forms and papers as we were not allowed to go inside. This added to the risk. There is lot of education and awareness now. Lot has changed since then” says an elderly insurance expert.

Speaking to a few agents reveal that though things are beginning to change, the traditional baggage still remains when it comes to insurance.

“As a society, we do not respect our women, the role of a housewife is not appreciated, women is not a financial asset, and we consider household job as a menial job. Even divorce, unlike in the west where it is a huge financial burden, is not expensive as the assets don’t have to be equally split and wife just gets a monthly payment for sustenance. In majority circumstances, the women is at a loss without any safety cover”, said an expert.

The prime minister’s effort to launch government schemes protecting the girl child, educate them by providing insurance cover and putting a financial incentive for the family to encourage them to study till they are ready to take financial decision is the step in right direction to involve the significant class in the mainstream.

Population growth, GDP growth, nuclear families, working mothers, earnings growth, better awareness and education will increasingly play a role in making more in adding more insurability to the population and provide them with social security cover.

While the government is doing its bit to promote group insuranc, like the  jan dhan, PM suraksha bima yojana, PM jeevan jyoti bima , etc —  and forcing the banks to create awareness and promote such insurance at minimal cost, the private sector has to do its bit for the larger interest and insurance density in the country.

Let not the financial value of a women remain restricted to the alimony determined by the judge.

 (The writer is a communications strategist and can be contacted @SharadGoel_)