Before considering the issues confronting the further development of microinsurance sector in India, and the challenges before the insurance regulator, for its expansion, one needs to understand the earlier background developments in promoting awareness for insurance products in the rural areas, undertaken by the Government of India, the nationalized banks and the nationalized insurers, both life and general.
One estimate puts it that out of about 35 to 40 million microinsurance users the world over, about 5 million of them are from India (International Labour Office/Strategies and Tools against Social Exclusion and Poverty (ILO/STEP) 2000a). Though the delivery systems may have been faulty and self-serving, the avowed purposes to stimulate the rural economies were never seen as flagging.
Indians, with their natural aptitudes are an enterprising lot, and any economic pursuit that enabled one to rapidly accumulate monies and possessions was attractive enough to undertake physical risks involved with it. The accumulation of possessions gave a feeling of self-fulfillment in life. This spirit and earnestness had engendered in them to pursue mainly agricultural occupations elsewhere in the world in the Caribbean, East and South Africa, Sri Lanka, Fiji, Malaysia and a host of other nations in the last two centuries.
Over 300 million persons today are believed to have been insured under life insurance; and another 70 million insured under general insurance, out of a total population of 1,100 million. If the gender gap of about 50% of women is taken out of this total, as not being insurance aware, or that their insurance needs are taken care of by their men folk, the number of those that are insurance conscious is not insignificant. The number that consider insurance buying, as a necessity to supplement their risk management capabilities, is another issue. The decision to buy insurance depends on a number of other imponderables. Just being risk aware is not enough.
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