Not sure about insurance and its benefits? Losses and disasters bring financial distress to all. Mortality is what defines the existence of humanity, characterising how birth and death are closely interrelated in life’s rollercoaster journey, a grim fact that the insurance industry has always taken realistic note of.
What is Insurance and why is it necessary?
Decades ago, insurance was considered as a safety net for Indian households that tucked away their savings for a better and financially secure future. As a product, insurance has been around for hundreds of years, promising to minimise the impact of certain uncertainties in the risky terrain of life’s journey. The concept of health insurance is traced back to the Middle Ages when guilds and miner’s associations identified the hazardous nature of their work. The benefits of health insurance spread to Europe thereafter and the US, and to countries where industrial hubs necessitated better hygiene and facilities for its workforce.
Social Stigma Around Insurance
In India, social stigma has often pushed discussions around insurance into a hush-hush area, whereby open and candid discussions rarely take place even between family members. Back in those ‘good old days’, financial distress and death were not common topics of discussion in Indian households, and certainly not against the backdrop of insurance.
Despite the spectacular growth of the insurance industry in the last two and a half decades of regulatory reforms, insurance penetration in India has hardly reached its optimum. Tweaking the famous poem penned by Robert Frost, one can say, ‘Miles to go!’
Understanding the Importance of Health Insurance in India
Worldwide, healthcare expenditures are rising rapidly. The WHO Reports observe that they have risen from 3% of world GDP in 1948 to 7.9% in 1997. Coming closer, the reports forecast that nearly $1 in every $5 spent in the US by 2024 will be on healthcare.
Public discourse in India does not always shed light on the benefits of insurance. While the number-crunching game around taking a life insurance plan or a health insurance policy will continue, there is a need to step up more awareness. Even the healthiest and fittest individual knows that illness can always be around the corner; hence, there is no point in putting off health insurance for another day. However, it is necessary for insurers in India to create more awareness. It is also a concern that commercial health insurance coverage has not met its optimum in India.
Consider the surging demand for motor insurance that can be attributed to regulatory norms in the country and the whopping growth in the number of motor vehicles per household. The same can be said for the increasing growth of health insurance due to customer demand. However, when it comes to life insurance growth, there is more potential that is yet to be navigated.
Another lesser-known cover pertains to fire insurance for homes and small businesses that actually need it, but tend to be dismal in terms of growth.
Interestingly, the demand for cyber insurance is soaring in India, as a recent survey by Sophos highlighted. According to the survey, India is fast emerging as a leading buyer of cyber covers.
Insurance is Essential – Here’s Why
In India, for decades, insurance has not been an easy decision to make nor is it bought on an impulse, for various reasons. Left to themselves, most Indian consumers may avoid it. However, in recent times, particularly post-COVID-19, there is renewed interest in insurance. Now, Indian households recognise the compelling need to strengthen financial resilience in case of unexpected distress.
Be it a salaried professional, a small business owner or a rich industrialist, the loss of ability to function properly in the event of an illness or a health issue puts them at the brink of financial risk, which only insurance can mitigate. For many Indians today, insurance is synonymous with the financial security of their loved ones.
For human capital to continue scaling up rapidly, good health is intrinsic, and so are financial prudence and resilience. Summing up, insurers have to find persuasive ways to educate and create a higher awareness about the necessity of insurance in preserving human capital from a variety of risks including illnesses.