The insurance market in India is an anomaly in the world where the focus is more on returns on investment than on protection, according to Anjali Malhotra, chief customer, marketing and digital officer, Aviva Life Insurance.

However, Ms. Malhotra added that this trend was slowly changing with millennials in India more aware than their parents were at the same age of the need for protection.

Safety net for families

“The primary purpose of life insurance is to make sure all lives are insured and there is a safety net for people’s families,” she said. “Having said that, the way insurance is being consumed in India versus the rest of the world, there is a stark difference. Anywhere else, insurance means protection and nothing else. In India, insurance is all about the return of money, the internal rate of return.

“In an under-penetrated market like India, the primary purpose of protection gets a little bit compromised in favour of the growth of money, and that’s an anomaly,” she added.

Life Insurance reach in India is at 2.72% whereas globally it is 3.47%, according to Aviva Life Insurance.

Ms. Malhotra also said the methodology for the calculation of insurance reach is different from what most people think it is. “Insurance penetration is on the basis of GDP,” she said. “It is the total value of premiums in the country divided by GDP. It’s not on the basis of the number of people but the value.”

According to Ms. Malhotra, the nature of the insurance market in India is also changing with younger people becoming more aware of the need for protection, and accessing insurance online rather than through an agent.

“People are recognising to take protection products at earlier ages so the median age of consumption of term [insurance] is somewhat coming down,” she said. “Where earlier it was above 30, it’s now below 30. People are starting to buy these products as soon as they get employed. There’s a sense of responsibility about the self.

“Our financial literacy survey that we took last year shows that the millennials are more aware of the need and importance of insurance than their parents were at that age,” she added. Also, with greater life expectancy, people are looking for longer-term products as opposed to ones that end at 65-70 years of age, she said.

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