Why Indians invest less in General Insurance?

Last Updated: Mon, May 07, 2018 11:14 hrs

"The key to making money is stay invested"

Running to offices daily is something that we do to get a good income at the end of every month but is that enough to live a life of your dreams? No! Most of the people will answer the same with a "No". So what other things you are doing to fulfill your dreams or to have a happy and relaxing life? Investment, yes, it is one of the most prominent ways to achieve our aims and goals of life. And why not, nowadays, we have multiple ways of investment that offer great returns and helps us in securing our lives as well. Among all the available options of investment something is still lacking behind and that is the general insurance industry. Although it’s a fact that general insurance industry plays a vital role in securing our lives and a few assets as well. There are multiple things that come under general insurance but still, people hesitate to invest in the same, but why? What is the main reason behind it? Before that, first it is essential to know what exactly comes under general insurance.

General Insurance - What exactly it offers?

General insurance which is also popular by the name of non-life insurance is there to cover your car, bike, health, and travel-related emergencies. Insuring your home also comes under general insurance. And if we talk about India then having a motor insurance is mandatory no matter what type of vehicle you own- a car, bike, truck or any other motor vehicle. You can’t drive on the roads of India until you carry a valid motor insurance that comes under general insurance. Moving forward to other important aspects of life- What is more important for you than your health? Yes, nothing, then how people can forget to secure the same with health insurance. A health insurance is basically an insurance policy that offers the needful cover to you in case of any medical emergencies. It will be a helping hand to fight against heavy medical bills to get a quality treatment. Same is with home and travel insurance, they both are an important part of our life but still, people do not give much importance to them just because they don't feel the urge to have it. Although, they realize it's importance when something bad strikes and create a hole in their pocket. All of these important insurance policies are must have things, but In India, people are not paying attention to it.

Reasons why Indians buy less general insurance policies

Overall, the Indian penetration is very low and especially when it comes to general insurance that includes health, property, motor and liability covers. As compared to other countries, Indians buy around Rs.750 of general insurance per person yearly whereas the numbers are relatively high in countries like around Rs.6,500 in Russia, China or Brazil. On measuring the premiums as a part of GDP, you will realize that India is at 0.7% as compared to a world average of 2.8%. General insurance is still lacking behind in India. A common problem behind such a less investment in general insurance is that people are still not confident about the claim process. They are not sure that claims would get settle or not, which is a big myth. The claim settlement ratio in general insurance industry is relatively high. The second reason is the lack of customized products that can go well with the needs of the customer, but this also is getting sorted with the time. But why it is still lacking, here are the reasons:-

Poor distribution

Apart from the major cities, distribution of insurance policies is poor. In India, the general insurance reach is spread over 10000 branches out of which 57 percent comes under tier 1 that is over 100000 population. The branches are spread over the large capitals that means access to general insurance is less when it comes to the large part of the country. Insurance companies do not have their presence in small towns and distributors earn less in such towns. The solution to this problem is that they permit distributors to earn when it comes to small towns.

Fewer product innovations

There are many plans that can easily mitigate risk, there are a few gaps in the product portfolio of the general insurance industry that leaves large risks uninsured.

Lack of command

In India, at this moment the government should think about the mandating catastrophe, property, and liability up to a certain extent. By mandating the same, it will result in price falling and will become marginal incremental costs.


With a little focus and some mandating policies, the general insurance industry can easily bloom and would be able to provide the required coverage to the uninsured section of India at an affordable cost.

Naval Goel is Founder & CEO PolicyX.com