Even as motor, home, travel and personal accident covers are increasingly turning indispensible, the fact remains that the insurance penetration level of 0.7 per cent in India is among the lowest in the world. In an interaction, KK Mishra, CEO, Tata AIG General Insurance tells Sandeep Singh that some incentive is required for egging people on to buy such products, as has been the experience with health insurance, which is witnessing a sharp increase in demand after incentives were offered. While he expects the new Irda chief to do something on the distribution front, Mishra is hopeful that the government would provide tax benefits on various general insurance products. Excerpts:
The industry had high hopes from the Budget. Are you disappointed with no incentive coming the insurance sector’s way?
We had hopes and while the finance minister did make announcements that will help the industry in the long run, what we expected from him to come as an immediate benefit in the Budget did not come through. All the announcements are administrative in nature and are not incentives. We wanted the government to do something on home insurance or personal accident insurance, but I assume that he had his own compulsions.
How do you see the industry currently?
The total premium of the general insurance industry is around Rs 70,000 crore but it’s still only 0.7 per cent of the GDP. I am of the firm opinion that unless something is done on the distribution side, per capita penetration of general insurance will not grow and remain flat at 0.7-0.8 per cent of the GDP. For any rapid change, there has to be some incentive. Today, in motor insurance very few people buy the product beyond the third year and in the motorbike segment, very few people buy it in the second year. The same is case with home insurance and personal accident insurance, hardly anyone buys it. I think that if the government offers some incentive, then people may go for it.
What makes you think so?
Today health has become important because there is some incentive there and people are buying it. They are buying it for two reasons — first is that they understand that the hospital charges are going up and second is that there is some incentive. In fact, people started buying it only when the incentives came in. It’s a small incentive and it won’t cost much. If they