Speaking at a Life Insurance Council event, Seth said the focus should shift from measuring as a share of GDP to tracking the number of unique lives covered.
“For our country, the relevant metric is coverage, how many unique lives are insured, rather than only looking at insurance penetration as a percentage of GDP,” he said.
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Seth said insurers should communicate insurance in terms that consumers can relate to, encouraging households to set aside a small portion of their monthly income for protection instead of relying on industry-wide metrics such as insurance density. Life insurance penetration, which is premium to GDP, is 2.7%. Q
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“We have to connect with people by asking whether they can spare 1% or 2% of their income, or Rs 100 to Rs 500 a month, to buy a protection plan,” he said.
To improve coverage over the next three to five years, Seth called on insurers to design products that are easy to understand and pocket-friendly, particularly for households that fall between low-income and affluent segments.
He noted that demand for policies with sums assured above Rs 50 lakh is relatively strong, but insurers have not adequately addressed the market for protection of Rs 5 lakh to Rs 25 lakh.
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“There is a gap in the Rs 5 lakh to Rs 25 lakh segment. These households save Rs 2,000-3,000 a month, but we need products that can channel Rs 500-600 of those savings into a combination of protection and investment,” Seth said.
He also said insurers should design products that account for irregular income streams, allowing policyholders to continue coverage even during periods of financial stress or temporary unemployment, instead of assuming steady monthly earnings.
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