The biggest factor that impedes the penetration of insurance in India is the lack of awareness about insurance. The penetration of life insurance in India is estimated at somewhere between three and five per cent while the knowledge of general insurance seems to be lower. India celebrates “National Insurance Awareness Day” on June 28 every year to review the country’s existing insurance coverage.
The gap between the insured and the uninsured continues to widen with the increasing population, which means that the IRDAI has to compulsorily take aggressive steps to tackle burgeoning ignorance among the people.
The Insurance Regulatory and Development Authority of India (IRDAI) recently issued draft guidelines for the establishment of “Bima Vahaks”. These guidelines aim to establish a dedicated distribution channel in every gram panchayat (village administrative unit) to improve insurance coverage and promote awareness among the population.
The guidelines state, “Following this objective will improve accessibility and availability of insurance in every nook and corner of the country.”
The Bima Vahak initiative is highly promising and has the potential to significantly improve insurance inclusivity and awareness. By actively engaging with the diverse requirements and aspirations of every Gram Panchayat, insurers can customize their offerings to provide extensive coverage and effectively meet evolving financial protection needs.
Who is a “Bima Vahak”?
For those unfamiliar with how the insurance industry works to inform and educate people about insurance, a corporate Bima Vahak refers to any legal entity that is registered in compliance with the law and is engaged by an insurer based on the guidelines provided. On the other hand, an Individual Bima Vahak refers to an individual who is appointed by an insurer or a corporate Bima Vahak.
Women have long been employed and hired for their ability to relate to people around them while communicating with them about life’s essentials. This also explains why the country’s insurance regulator is keen on onboarding of women who can speak to the locals and teach them about the importance of insurance in financial parlance.
Bima Vahaks will be sourced from different villages to facilitate the distribution and servicing of insurance products.
Each insurance company has the responsibility to ensure Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance for policies sourced through both individual Bima Vahaks and corporate Bima Vahaks. Furthermore, insurers are required to establish systems, processes, internal controls, and infrastructure to facilitate smooth communication and interaction with all Bima Vahaks.
In addition, these companies are required to designate a complaint-handling officer at the local office of each gram panchayat. This officer will address any grievances or complaints against Bima Vahaks.
Insurance for all by 2047
The IRDAI has embarked on an ambitious dream of educating every Indian about insurance and its significance by 2047. Given how many people still continue to look at insurance with suspicion, is it even remotely possible to extend insurance coverage to every Indian in such a short period?
Vivek Chathurvedi, CMO, Digit Insurance added, “The concept of Bima Vahaks proposed by the insurance regulator IRDAI has the potential to truly increase insurance penetration at the grassroots level by overcoming geographic barriers and reaching the last mile. It can play a pivotal role in reaching the underserved sections of society by activating local community members at the gram panchayat level as individual Bima Vahaks. Moreover, the focus on prioritizing the onboarding of women as Bima Vahaks would not only help in driving inclusive growth and providing an alternate source of income but would also act as a catalyst in increasing awareness and trust about insurance products within the communities. This is an untapped distribution channel that can create a lot of value for insurance companies and can play a crucial role in achieving IRDAI’s commitment of ‘Insurance for All by 2047’.”
Jitin Parekh, Company Secretary and Chief Legal & Compliance Officer, Aegon Life Insurance Company added, “Bima Vahaks will be invaluable in spreading insurance awareness among the masses through personal interactions and localized knowledge. To achieve widespread awareness by 2047, we must adopt a comprehensive approach that combines Bima Vahaks' strengths with technology and collaboration. One of the key advantages of Bima Vahaks lies in their deep understanding of local communities. This allows them to effectively communicate the numerous benefits that insurance products offer to potential customers. By establishing personal relationships, providing tailored advice, and addressing specific concerns, they are able to build trust and credibility within their communities.”
Parekh added, “To further enhance their impact, we must empower Bima Vahaks with comprehensive training, essential resources, and the latest technology. This will enable them to serve as effective ambassadors of insurance, equipped with the tools they need to connect with and educate individuals. With a specific focus on onboarding women, who have the potential to gain the trust of locals, this field force will play a pivotal role in the distribution and servicing of insurance products. Together, by capitalizing on the strengths of Bima Vahaks, embracing technology, fostering collaboration, and placing a premium on financial literacy, we can work towards a future where insurance awareness is pervasive. This will enable individuals to safeguard their families, protect their assets, and secure their future financial well-being.”
Undoubtedly, the Bima Vahaks will help the insurance sector to extend insurance coverage to every Indian. However, the success of this initiative also relies on our approach to managing our finances and our willingness to gain knowledge about the intricacies of finance, including insurance. By being proactive in understanding and learning about these aspects, we can make informed decisions and ensure financial well-being.
