Challenges of Microinsurance in India

This Note tries to identify and analyse the challenges faced by the stakeholders of microinsurance in India.

After half a decade of microinsurance regulation, there are some clear trends emerging in the way microinsurance business is conducted in India. According to the IRDA Annual Report, 2010-11, 3.65 million microinsurance policies were sold in India in the year 2010-11 covering lives of 18.9 million people. The cumulative premium collected from microinsurance was Rs.2.86 billion. Some of the trends in the regulated microinsurance sector are:

The public life insurer is the clear market leader in microinsurance,
Group microinsurance policies have become popular with the private players,
Most insurer still continues with a “”Just Achieve Target”” approach for microinsurance,
Insurers have found alternative to microinsurance products for achieving their “”rural sector”” targets, and
Microinsurance distribution has remained un-uniform in spite of the special regulation on Microinsurance Agents (MIA)

This Note analyses these trends with decade long comparative data on microinsurance products and their performance. The reasons for the emerging trends are identified and possible future trends are also projected.

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