MUMBAI: In a nation that’s the world’s fifth largest economy but has one of the lowest insurance penetration levels as low as 4% is nothing to write home about. But this may change if the regulator – Insurance Regulatory and Development Authority (Irdai) has its way from a cost-benefit or economic perspective. Irdai chairman Debasish Panda calls this Bima Trinity or the UPI-moment of insurance, which in effect means sachetisation of all insurance products— life, health, property and personal accident covers--all at just R1,500 per policy.
The move to launch the first-of-its-kind all-in-one affordable insurance product comes in the backdrop of setting an ambitious goal of insurance for all by the time the nation turns 100 in 2047. The goal has been set given that the overall insurance penetration inched down to 4% in FY23 (figures for FY24 aren’t yet officially out) from 4.2% in FY22, according to a Swiss Re-Sigma report. This is much below the global average of 6.8%. In the past two decades, the industry grew at over 16% despite prices heading south. The lowest penetration is in the general insurance sector at 1% but the industry is eyeing a 50% growth over this by 2030 to reach 1.5% of GDP. But when it comes to health insurance, it’s much better at 37% or 514 million of the 1.4 billion people have medical insurance in 2021.
The Bima Trinity
The Irdai under Panda has been pushing the larger coverage objectives with the full support of the industry by co-creating regulations with the industry. The Bima Trinity includes Bima Sugam which is the protocol or the digital platform, the Bima Vistaar which is the bundled product covering life, health, causality and property; and the Bima Vahak which is the women-centric distribution channel.
The press note on Bima Sugam-Insurance Electronic Marketplace Regulations 2024 issued in March this year, says the aim is to establish a digital public infrastructure named Bima Sugam to help universalize and democratize insurance as well as to empower and safeguard policyholders’ interests with the final objective of achieving the vision of ‘insurance for all by 2047.’ The key cog in the wheel is Bima Sugam which is like an e-commerce platform where insurance companies can sell their products.
If Panda’s plan fructifies, Bima Sugam will be an online insurance marketplace for buying, selling, and servicing insurance policies as well as settling claims. “This marketplace serves as a one-stop solution for all insurance stakeholders, including customers, insurers, intermediaries, and agents, thereby, promoting transparency, efficiency, and collaboration across the entire insurance value chain,” is how the Irdai puts it. At a recent summit of insurance heads in Hyderabad, the Irdai proposed to price Bima Vistaar, its ambitious mass product aimed at the rural markets, at R1,500 per policy. It is designed to provide a basic social safety net cover with combined features of life, health, personal accident and property insurances.
Attractive pricing
If the Irdai has it way, (the pricing is not officially announced yet) a life cover under Bima Vistaar will come at an annual premium of R820; mediclaim at R500; personal accident cover at R100; and property insurance as low as R80 per annum. If one takes the policy for the entire family on a floater basis, the premium will be printed in at R 2,420, along with an additional R900 for the rest of the family members. Bima Vistaar offers a sum assured for life, personal accident and property covers at R2 lakh each, while the health cover gets one R500 per day for 10 days with an upper level cap of R5,000 which is available without producing bills/documents. The property cover offers 50% automatic payout if the damage is 25%, and if the damage is 40%, 100% settlement or a maximum of R2 lakh per policyholder.
Being a unified platform, Bima Sugam will be integrated with various government databases, insurers, intermediaries, insurance repositories etc, for fetching customer details, providing product information, and buying and servicing insurance policies.
No paperwork
Traditionally, buying insurance involves lengthy paperwork and one also needs to maintain those physical documents for renewals/claims. Some private sector players are offering digital services especially since the pandemic. But Bima Sugam just eliminates the paperwork and one can simply have the policy in the electronic format.
Affordability at the core
Bima Sugam is all set to make insurance policies more affordable by doing away with or sharply reducing the agency commissions by making insurers sell policies directly through this platform, leading to lower premium payout for the policyholders who are mostly villagers. The regulator has even proposed that an insurer can offer a discount on premium rates for policies purchased directly through the platform. The regulator has decided to make it popular among agents by offering them a 10% commission.
One single window
With Bima Sugam, one no longer needs to keep a tab of different policies separately but can access all the policies --life, health and non-life insurance—in one single window. One can also check policy details and renewal dates through Bima Sugam.
Bima Vistaar: Key benefits
Bima Vistaar is an all-in-one insurance plan covering the policyholder for life, health, personal accident and property risks
The bundled policy, likely to be priced at Rs 1,500 per policy, seeks to make faster insurance penetration
Rs 2 lakh life cover for an annual premium of Rs 820, accident cover at Rs 100 premium
Health cover offers a daily payout of Rs 500 for up to 10 days and a maximum of Rs 5,000. Property cover offers 50% payout for 25% damage