Towards Improving The Performace of Microinsurance Sector in India

Microinsurance (MI) is a policy to cover up low income people against perils. It is a mechanism to protect poor people against risk in exchange for insurance premium payments tailored to their needs, income, and level of risk. Microinsurance is recognized as a useful tool in economic development and a safety tool for many low income people who do not have access to adequate risk-management tools. In India, the Micro Insurance Regulations, 2005 of the Insurance Regulatory and Development Authority (IRDA 2005) defines a microinsurance policy as a general or life insurance policy with a sum assured of Rs. 50, 000 or less. The new revised IRDA (2015) microinsurance regulations increased limits for life Rs. 200, 000 (approx. USD 3, 100), for non-life Rs. 100, 000 (approx. USD 1, 560) and for group health Rs. 250, 000 (approx. USD 3, 900). The main objective of this paper is to study the performance of microinsurance segment in India for Individual segment and Group segment in terms of the number of policies sold in India by Life Insurance Corporation of India (LIC), a public sector giant in India. Though the number of MI agents increased steeply in the recent years, it was not reflected in the performance of microinsurance sector in terms of the premium earned, the number of policies sold, and the number of lives covered. The declining performance of the LIC and private players in expanding the microinsurance sector indicates the need to explore other alternate distribution channels.