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Over the years with persistent Government efforts, the insurance penetration (premiums to GDP) in India increased from 2.71% in FY01 to 5.20% in FY09 but thereafter the level of penetration was declining and reached 3.30% in FY14. In 2015, the government of India launched 2 insurance schemes – Pradhan Mantri Suraksha Bima Yojana (PMSBY) that covers accidental cover of Rs 2 lakh with Rs 12 premium and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) for life cover of Rs 2 lakh with Rs 330 premium to provide insurance cover to the mass at a cheaper rate. Subsequently, the insurance penetration has started increasing again from FY15 and is at 4.20% in FY20, according to SBI Ecowrap.

Growth in insurance industry

The pandemic-induced disruption did result in a behavioural change of households with the life insurance industry registering a smart growth, with new premium collections expanding by 7.5% and individuals’ single premium growing by 36.19% in FY21.

The cumulative number of enrolments under insurance and pension schemes across all entities in India today stands at 68.98 crores, of which there are 10.34 crore persons enrolled in PMJJBY and 23.40 crore in PMSBY, with claim servicing ratios of 93.7% and 77.3% respectively. It is interesting to note that the number of people covered through life insurance by insurance companies during May 2015 to July 2021 stands at around 17 crore, while the government-sponsored PMJJY scheme has enrolled 10 crore people during the same period.

The SBI report mentions that there has also been significant progress regarding pension coverage for unorganised sector workers. For example, under Atal Pension Yojana (APY), 3.13 crore of persons have been enrolled till June 2021 with male to female subscription ratio of 56:44. Apart from APY, there are 3 more government sponsored pension schemes for unorganised sectors which were launched to provide old age protection. The schemes envisage providing a minimum assured monthly pension of Rs 3000 after attaining the age of 60 years. The monthly contribution ranges from Rs 55-Rs 200 depending upon the entry age of the beneficiary.

Women’s share

Currently, there are 1.1 crores of enrolments under such schemes. Further, it is interesting to know that the women’s share in insurance is increasing in India. In FY20, the women’s share was 32% in terms of the number of policies. However, in the government sponsored schemes, the women shares stand at 37% in PMSBY, which is encouraging.

Recommendations

The report recommends that the ambit of providing social security succour to unorganised sector could be further enhanced through 2 simple measures.

First, though MGNREGA has provided livelihood security, the SBI report proposes MGNREGA to be also a provider of social security. For every 100-day worked, the government can make a defined contribution of say 10 days for creating social security. Further, there should be compulsory enrolment of MGNREGA workers in PMJJBY and PMSBY for a payment of only Rs 342 (330+12). As only 10% of individuals complete 100 days of work, the cost of compulsory enrolment will be only Rs 400-500 crore that can be borne by the government. This could immediately benefit at least 1 crore additional people.

Second, to achieve Universal Health Coverage, the government has launched Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). A total of 16.14 crore Ayushman cards have been issued to the scheme beneficiaries. The government should launch an opt-in scheme for health insurance in line with Jan Suraksha schemes. The opt-in scheme may be implemented by auto debit amount from the interest from the savings account and paying towards mediclaim policy. The approximate size of the health insurance now is Rs 58,572 crore and savings bank interest is at least Rs 1.35 lakh crores. With the number of Jan Dhan accounts at 40 crores, the health insurance unveiled might potentially double the existing Ayushman coverage in one go, the report further noted.