New Delhi, Sep 21 (UNI) Only around 10 per cent of Indians had life insurance and two per cent health insurance cover in 2007, a study says.
Life insurance providers in India managed to reach 105 million customers in 2007, according to estimates prepared by Christopher Butel, Chairman of Invest India Market Solutions.
The study says health insurance market is growing strongly at an annual rate of more than 40 per cent but on a small base only with total coverage still very low at around two per cent of the population.
The study expects life insurance market to grow between 10 and 20 per cent annually.
As much as 89.5 per cent of people with annual income of over Rs five lakh have life insurance cover, while for those slotted between Rs 2.5 to Rs five lakh income it was 87 per cent. Between Re one and Rs 2.5 lakh, coverage is 74 per cent and between Rs 50,000 and Rs 1 lakh, the coverage is 51.1 per cent. For those who have income less than Rs 50,000, the coverage is at a low of 19.2 per cent, the study estimates.
More than 80 per cent of businessmen have gone for life insurance cover, while the corresponding figure for government salaried workers is 72.6 per cent, followed by self employed professionals at 68.8 per cent. Percentage coverage for the agricultural labour was the lowest at 15 per cent.
The study says the Central government's decision recently to mobilise new pension system (NPS) for informal sector workers, and initiatives to establish micro-pension schemes for the lowest income workers could boost the retirement savings market which is presently targeted at public sector and private sector salaried employees.
NPS, it adds, can help tap potential of 80 milllion customers.
In aggregate terms, about 10 per cent of the paid workforce in India is saving for retirement currently through either employer-sponsored schemes or voluntarily through public provident fund, life insurance and mutual fund products. This market has the potential to grow double its present size with successful promotion, sale and distribution of NPS, the study says.
It says life insurers and asset management companies can also capture a share of NPS demand with pension products that they offer directly. Presently, only 2.7 per cent of existing life insurance and retail mutual fund customers save consciously for retirement in the form of life insurance plans and mutual fund products currently.
The study says government interventions are required in the health insurance market to both mandate and subsidise the premium costs for certain consumer segments to promote more inclusive arrangements and to share risk to enable the sector grow in a more predictable and financially sound manner.
At the same time, the study recommends regulating pricing practices of health providers and rebasing public health provision to dovetail with health insurance modalities.
The study will form the theme paper at an Insurance Summit 2008 to be held here on September 26-27. The two-day session will be addressed by a number of experts from India and abroad including IRDA chairman J Harinaryan.
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