Need to spread awareness about home insurance
Most Indians sink most of their investments into a home. They upgrade, trade in a small one for a bigger one, buy multiple homes in times of plenty and rent them out for additional income.
Yet very few ever consider insuring this investment / nest egg / family asset. An overwhelming majority of Indian homes are not insured against fire, natural disaster or even burglary. Data from across insurance companies suggests that of all general insurance premiums paid nationally, home insurance accounts for less than 1%. Realty consultants say the number has been at or below this level for decades.
Amid climate change, and the growing strength and frequency of large storm events, the stakeholders like Manju Yagnik, vicepresident of the National Real Estate Development Council (Naredco, Maharashtra), say this must change. “The government should work to spread awareness about the importance of home insurance. One big deterrent is that, unlike health insurance and certain loan products, home insurance does not come with tax rebates. So to
make it more popular, it might be worthwhile to package home insurance along with home loan products and offers,” Yagnik says.
“By and large, homeowners in India are comparatively at ease about the security of their homes. Unlike in the US, there aren’t tornadoes and megastorms threatening them, at least not across most of India. There isn’t much violent crime in the major cities either. In such markets, it’s typically only after a burglary or fire that people begin to consider insurance,” says Shrenik Baid, financial services partner at Deloitte India.
A crucial factor is the lack of information and awareness.
“Insurance companies too have been slow in spreading the word. There is confusion over what such insurance would protect against, and there is a sense that home insurance is too expensive,” says Santhosh Kumar, vice-chairman at Anarock Property Consultants. One way to speed up the process, believes Kumar, is to expand the distribution system. “Currently, insurance-related products can only be distributed by agents or brokers approved by Insurance Regulatory and Development Authority (IRDA). These agents must be allowed to outsource their work to sub-brokers to reach a wider section of the population.”
Kumar is also hopeful that the changes in the sector after RERA will lead to more takers. “Section 16 of RERA requires the promoter of a real-estate project to seek insurance for all new and ongoing projects towards the title of the land and towards construction of the project. The proper implementation of these directives will ensure the safety of homes. At the same time, insurers can work with RERA to improve the reach of home insurance schemes,” he says.