As less than 10 per cent of Indians have life insurance cover, the way forward to increase life insurance penetration is through bancassurance, according to Anuj Mathur, CEO, Canara HSBC Oriental Bank of Commerce Life Insurance. The bancassurance channel involves banks selling life insurance to their clients.
“We should ensure that whoever has a bank account has insurance coverage. Bancassurance is an important channel through which insurance cover can be increased. Banks are accessible to almost the entire population, and there is a level of trust that enables the selling of insurance,” Mr. Mathur said during the release on Wednesday of a consumer insights survey report conducted by Canara HSBC Oriental Bank of Commerce Life Insurance and FICCI.
The report, titled ‘Life Insurance: A Consumers’ Perspective’, finds that 81 per cent of the survey respondents have an operational bank account within 3 km of their residence or office.
One of the key findings of the survey is the reason people buy life insurance.
The survey finds that the primary reason respondents invested life insurance was to use it as a savings instrument. Seventy five per cent of the respondents marked “saving for future needs like child’s marriage, education, etc.,” as the primary reason for investing in life insurance.
This reveals a lack of awareness when it comes to life insurance, according to A. Didar Singh, Secretary General FICCI. “There is no other instrument that gives such long-term savings opportunities as life insurance. However, people need to understand that life insurance is also about protection. Even people who have bought it see it as a savings instrument and not as protection against accidents,” he said.
“The survey was conducted in the backdrop of the low penetration and density of the Indian life insurance market. As compared to global average penetration and density level of 3.4 per cent and $368, India’s insurance penetration and density levels are much lower at 2.6 per cent and $44,” Mr. Singh added.
The lack of awareness runs deeper, the survey finds. Overall, nearly 70 per cent of the respondents did not know what benefits they were due from their policy in the event of its maturity and nearly 60 per cent did not know the benefits accruing to the holder in the event of sudden death.
That is, they did not know what they were buying.
“A collaborative effort is required between banks and insurers for developing a robust need-based selling process,” the report said.
“I think it’s an enablement which the government has done. It is a good thing which has happened and as a result of that what we will see, not immediately but over a period of time, that many more insurance players will try to set up and establish their business in India.
“It will offer wider choice to the customer,” he added.