A case of ‘missing’ insurance data
LAST MONTH, the Insurance Laws (Amendment) Bill, 2015, was passed in Parliament. For long, this bill has been referred to as a sort of a litmus test to whether the government of the day is serious about economic reforms.
The Bill was widely expected to be resisted by the opposition. But its passage, especially the support it earned in the Rajya Sabha, should be a green signal for reforms.
The most attention-grabbing aspect, which also faced maximum resistance, was the part about enhancing the Foreign Direct Investment (FDI) limit in private insurance companies.
The general logic behind enhancing this limit is that Indians have remained underinsured even years after the insurance sector was opened up.
And the figures often quoted in favour of this are India’s insurance density — which is the per capita premium underwritten — as well as premium underwritten as the ratio of GDP. Both these, a measure of how much money the industry has extracted from people, are far below the global average.
This means that insurers and the insurance regulatory body IRDAI measure success in terms of how much money the industry takes from customers, rather than how much insurance they have delivered and to how many people.
The industry is supposed to deliver insurance. But when a customer dies, how much money does his family get? What portion of the cover does the family actually get, and how many families get anything at all? And what is the ratio of the total premium collected to the cover provided?
Shockingly, this information either doesn’t exist (meaning the IRDAI has not bothered to collate it), or it’s a secret. My guess is that the answer would be scandalous, so it is never revealed. This is just the sort of thing that the Right to Information Act was initiated for, don’t you think?