Revolutionizing Insurance Access: IRDAI’s Initiatives for the Underinsured Population in India

The Insurance Regulatory and Development Authority of India (IRDAI) has launched several new initiatives to increase insurance penetration and coverage in the country, especially in the rural and semi-urban areas. These initiatives include Bima Sugam, Bima Vahak, and Bima Vistaar.

Bima Sugam is an online portal that will serve as a one-stop shop for all insurance-related queries, policy purchase, claim settlement, and insurance advice.

Bima Vahak is a program that aims to create a women-centric insurance distribution channel, while Bima Vistaar is a social safety net product targeting untapped geographies.

These initiatives are expected to bridge the protection gap in the country and help achieve the goal of ‘Insurance for All.’

In this article, we will take a look at the various initiatives launched by the Insurance Regulatory and Development Authority of India (IRDAI) to increase insurance penetration in the country.

We will discuss three specific initiatives – Bima Sugam, Bima Vahak, and Bima Vistaar, and how they can contribute to the goal of providing insurance for all.

We will also explore how these initiatives can help bridge significant protection gap in the country and how they aim to simplify and digitize the insurance marketplace.

Additionally, we will discuss the potential impact of these initiatives on the insurance industry and the steps insurers may need to take to tap into the underinsured and uninsured market.

The insurance industry in India has been gradually expanding over the years, with insurance penetration rising from 2.7% in the early 2000s to 4.2% in 2020.

However, according to the Economic Survey 2022-23, this growth is expected to accelerate in the next decade, positioning India as one of the fastest-growing insurance markets globally.

In 2020-21, the insurance regulatory body, IRDAI, reported a growth of 11.70% in insurance penetration, which increased from 3.76% in the previous year. The density of insurance also saw an increase from $78 in 2020-21 to $91 in 2021-22.

To further promote the goal of “insurance for all,” IRDAI has been active in introducing innovative initiatives and regulations in the insurance industry.

It has also established a 24-member committee to explore and suggest ways to enhance the coordination and operations of Bima Vahak, Bima Vistaar, and the digital platform – Bima Sugam.

What is Bima Sugam?

Bima Sugam is an online portal introduced by IRDAI that was planned to be launched on January 01, 2023, but was postponed.

It aims to be a one-stop-shop for all insurance-related needs, such as policy purchase, claim settlement, and advice. The portal is envisioned to be a trusted platform by IRDAI and will be facilitated by web aggregators, brokers, insurance agents, bank agents, etc., to sell insurance policies.

The platform will be a centralized database that will provide assistance to consumers for all insurance-related queries, speedy acceptance of new/sandbox products, and a window to view policy details and renewals.

IRDAI is likely to release the Request for Proposals for service providers soon, and around Rs. 100 crore is expected to be raised through insurance companies, aggregators, agent bodies, and more.

The platform’s rollout could happen in two phases, initially functioning as a data bank for insurance firms and intermediaries, and in the second phase, listing the products on it.

According to sources, IRDAI Chairman Debasish Panda has recently met with the chiefs of life and general insurance companies to discuss the platform’s launch.

What is BimaVahak?

BimaVahak is an initiative by IRDAI to reach the last mile of insurance distribution.

Under this initiative, each Gram Panchayat will have a Bima Vahak who will sell and service simple parametric bundled insurance products. The aim is to create a women-centric insurance distribution channel, which can help build greater trust and awareness of insurance products in rural areas of India.

Experts believe that the Bima Vahak initiative will function like rural banking correspondents and will be a significant boost for the insurance industry to reach the last mile.

However, insurers need to collaborate with state governments and work on developing state-level insurance plans to tap into the underinsured and uninsured market.

Insurance companies have adopted a state each, and with the help of state governments, they are developing state-level insurance plans, similar to what has been done in the banking sector.

What is Bima Vistaar?

The IRDAI is working on a new insurance product called “Bima Vistaar” that is designed to provide social safety net coverage to untapped regions.

This product is expected to be launched soon on the IRDAI’s “Bima Sugam” platform.

In October of last year, the IRDAI formed a 24-member committee, led by Thomas Devasia, to develop an affordable and comprehensive insurance policy called Bima Vistaar that would provide coverage to rural populations in the event of natural disasters like floods or earthquakes.

These initiatives are aimed at addressing the issue of a large section of the population being deprived of financial aid and insurance coverage.

A significant portion of the population, known as the “missing middle”, does not have access to health insurance, while property insurance and coverage for MSMEs are also inadequate.

Bridging this protection gap is essential, and the new initiatives are expected to be a game changer in achieving the goal of insurance for all. Bima Vahak and Bima Vistaar are specifically designed to increase insurance penetration in rural areas and semi-urban towns.

Bima Sugam, on the other hand, simplifies and digitizes the insurance marketplace, making it easier for individuals to buy policies, renewals, claim settlements, and portability.

By eliminating the need for lengthy forms and reducing commissions paid to intermediaries, Bima Sugam aims to address several roadblocks that individuals face in fulfilling their insurance needs.

The IRDAI’s initiatives of Bima Sugam, Bima Vahak, and Bima Vistaar are significant steps towards ensuring wider insurance coverage and increasing insurance penetration in the country, especially in the rural and semi-urban areas.

By simplifying and digitizing the insurance marketplace, providing affordable and comprehensive insurance cover, and exploring new distribution channels, these initiatives will help bridge the significant protection gap that exists in the country.

These initiatives will enable the insurance industry to reach out to a larger section of the population and provide them with financial security and protection. The success of these initiatives will not only benefit the individuals but also contribute to the overall growth and development of the Indian economy.

Leave a Comment