Universal cover – IRDAI’s plans to expand risk protection levels need government backing

Source: The post is based on the article “Universal cover – IRDAI’s plans to expand risk protection levels need government backing” published in The Hindu on 31st May 2023

Syllabus: GS – 2: Issues relating to the development and management of Social Sector/Services relating to Health.

Relevance: About all-in-one insurance policy.

News: Insurance Regulatory and Development Authority (IRDA) is devising a “UPI-like moment” in the insurance sector by planning an all-in-one insurance policy.

About India’s insurance sector

Earlier, the Indian insurance sector was a public sector-led industry. But now with the entry of private players, India’s insurance penetration (the ratio of premium payments to GDP) has risen — from 2.7% in 2001-02 to 4.2% in 2021-22. This is a slide in the metric over the past decade from 5.2% in 2009-10. Further, non-life policies are yet to surpass 1% of the total mark.

About the all-in-one insurance policy

What will be the expected benefits of an all-in-one insurance policy?

-State government’s involvement and the creation of state-level insurance committees would help formulate granular district-wise strategies for raising awareness and coverage levels.

-Industry players need to look beyond the top cities and the ‘Bima Vistaar’ scheme could catalyse the volumes they need to get out of their comfort zones.

What more should be done to make all-in-one insurance policy work?

India is a country where one health calamity can push a household below the poverty line. So, the Centre needs to rethink the 18% GST levy on health and life insurance premiums.

The IRDA underwent a nine-month vacuum before the appointment of the current chairmen. To make policies work the government should ensure a continuity of leadership in the IRDA.