India has witnessed commendable growth in its insurance sector, and this positive trend can be attributed to the concerted efforts of Prime Minister Narendra Modi's government in the last nine years. The sector has experienced increased penetration, especially after the pandemic, leading to further financial inclusion and digitalization along with streamlining of business operations, including sales, customer service, and claims management.
Enhancing insurance access to the common man and augmenting social security, life insurance penetration in 2021 stood at 3.2 per cent, a figure nearly double that of emerging markets and slightly surpassing the global average. This noteworthy achievement is attributed to an array of Modi government initiatives.
One such initiative exemplifying the government's commitment to increasing insurance penetration is PM Jan Arogya Yojana. It is by far the world's largest health insurance plan funded by a government. The scheme offers assured health coverage of up to Rs. 5 lakh per family per year for secondary and tertiary care hospitalization. It covers nearly 55 crore individuals of 12 crore vulnerable families. Apart from giving the common man access to good hospitals and standard treatments, PM Jan Arogya Yojana acts as a safety net, ensuring that medical emergencies don't spiral into a cycle of debt.
To ensure the same, over 26,000 hospitals, including more than 11,000 private hospitals, have been empanelled under the scheme. A total of 6.2 crore free hospital admissions worth over Rs. 79,000 crore have been catered to via the scheme. This has resulted in immense savings in out-of-pocket expenditure for the poor, amounting to more than Rs. 1.25 lakh crore. Had it not been for the scheme, the same treatment cost would have increased almost twice.
Another noteworthy scheme is the Pradhan Mantri Suraksha Bima Yojana (PMSBY). Rolled out in 2015, PMSBY aims to provide one-year accidental death and disability coverage at an affordable premium. As of April 2023, the cumulative enrolments under the scheme have been more than 34.18 crore, and an amount of Rs. 2,302.26 crore has been paid for 1,15,951 claims. As can be seen, the scheme has successfully reached millions of Indians, especially those from economically disadvantaged backgrounds, providing them with much-needed financial protection.
Pradhan Mantri Jeevan Jyoti Bima Yojana is a yearly life insurance scheme that is renewable from year to year, providing cover for death for any reason. As of April 2023, the cumulative enrolments under the scheme have been more than 16.19 crore, and Rs. 13,290.40 crore has been paid for 6,64,520 claims.
Further, the Atal Pension Yojana (APY) emphasizes the government's dedication to enhancing social security. Launched in 2015, APY encourages individuals in the unorganized and private sectors to voluntarily save for retirement. By offering fixed pension amounts based on the contribution made, APY ensures a reliable income stream during the twilight years, promoting financial inclusion and long-term financial planning. The total enrollment under the APY will have crossed six crore by Dec 2023.
The Modi government introduced the PM Fasal Bima Yojana, insulating the cultivation business. Making farming a risk-free phenomenon, the scheme secures farmers, both before sowing and post-harvesting, from crop loss due to natural calamities, pest attacks and diseases. Insurance coverage under the scheme and financial assistance to farmers ensure their continuance in agriculture and encourage them to adopt innovative and modern farming practices. Since 2016-17, over 5.5 lakh farmer applications have been insured with Rs. 1.5 lakh crore paid out in claims.
As a result, the life insurance premium registered a year-on-year growth of 10.2% in FY2022, with new business firms contributing 45.5% of the total premiums. Similarly, the gross direct premium of non-life insurers recorded a year-on-year growth of 10.8% in FY2022. This growth is attributed to health and motor segments.
The Modi government's latest move to increase the FDI limit in the insurance sector from 49% to 74% has also opened newer possibilities for its growth and expansion. It enables global insurance companies to keep a favourable, long-term view of the Indian insurance sector. This will open up the Indian sector to greater foreign investments, global processes and technologies, along with international best practices. It will, in turn, help consumers in India with greater availability of affordable products, increased competition, and enhanced insurance penetration. It will also lead to more job opportunities for semi-skilled insurance professionals.
According to the Economic Survey 2022-23, India's insurance sector is set to be one of the fastest-growing markets worldwide in the coming ten years. As India continues on this trajectory of growth and development, the Modi government's initiatives in the insurance sector stand as a testament to its commitment to inclusive and sustainable progress. Prime Minister Narendra Modi's relentless efforts to boost insurance penetration in India have yielded significant positive outcomes. By introducing a spectrum of inclusive and sector-specific insurance schemes, the government has successfully extended financial security to millions of Indians. These initiatives not only contribute to individual well-being but also foster economic resilience and stability at the national level.
