How India Buys Insurance 2.0, Uncovering Gaps In Coverage And Awareness: Policybazaar

Policybazaar.com, a leader in India's online insurance market, recently released the second edition of its consumer insights report, "How India Buys Insurance 2.0." This new report shines a light on the inadequate awareness surrounding the costs associated with health and life crises and the critical gaps in adoption of health and term insurance. The findings stem from a survey of nearly 4,000 individuals across India, revealing that a significant portion of the population underestimates healthcare expenses with 48% of insured opting for a cover of Rs 5 lakh or less.

Furthermore, the report underscores the fact that 47.6% of the Indian population lacks knowledge about term insurance and its benefits. Despite the growth in term insurance, which saw an 18% increase in FY24, a vast majority of those who do not purchase term insurance, about 87%, grossly miscalculate their family's financial needs. Experts advise a life insurance cover of 15-20 times an individual's annual income to ensure dependents are supported for at least a decade, yet only 13% of non-buyers align their estimates with this recommendation.

The Rising Importance of Health Insurance

The survey also highlights a shift in financial product preferences among Indians. Health insurance has emerged as one of the top three financial products for 28.3% of respondents, ranking it above traditional investments like equities, mutual funds, and government bonds. Despite its growing importance, 75% of health insurance buyers in India have a cover of Rs 10 lakh or less, with the issue being more pronounced in South India, where 66% have coverage of Rs 5 lakh or less. This points to a widespread underestimation of medical costs, as approximately 51% of non-buyers believe critical illness treatments cost less than Rs 5 lakh.

Sarbvir Singh, Joint Group CEO of PB Fintech, expressed his enthusiasm for the report's release, stating, "We are delighted to release the second edition of How India Buys Insurance following the overwhelming response and industry discussions sparked by its first edition. This year's report puts a spotlight on the awareness gap even more evidently than before. A large proportion of consumers plan to sell ancestral assets or borrow money during a crisis rather than opt for simple, accessible solutions like health and life insurance to protect their families. As an industry, it's imperative that we strengthen awareness and improve the overall customer experience to drive broader adoption and ensure financial security for all."

He added, "At Policybazaar, we remain committed to addressing these challenges. This report is one of our many initiatives aimed at increasing insurance penetration and bridging the protection gap across the country."

A Call to Action for the Insurance Industry

The findings of "How India Buys Insurance 2.0" serve as a stark reminder of the persistent gaps in insurance coverage and financial planning among Indians. The report not only highlights the urgent need for increased awareness and understanding of financial risks but also calls on the industry to take proactive steps in educating consumers. This approach aims to prevent individuals from making insurance decisions solely in times of crisis, emphasizing insurance as a necessity rather than a last-minute solution.

Policybazaar has established itself as a pivotal figure in the insurance sector since its inception in 2008. With a commanding 93% share of the digital insurance aggregator market and an annual premium collection surpassing Rs 15,000 crore in FY24, the platform has become synonymous with trust and reliability in financial protection. To date, Policybazaar has issued over 44.3 million policies, securing the well-being of 9 million families against various adversities. The company's commitment to providing transparent, efficient, and unbiased insurance solutions has been instrumental in making insurance understandable and accessible to its extensive user base of over 80.5 million registered individuals.

This report, based on comprehensive feedback from participants across all Indian states and union territories, reinforces the notion that insurance in India is not merely purchased but encouraged through informed decision-making. As the industry moves forward, the insights garnered from "How India Buys Insurance 2.0" will undoubtedly play a crucial role in narrowing the protection gap and fostering financial security across the nation.