India Has A Protection Gap Of $8,555 Bn In 2014: Swiss Re report

<p>In India, the size of the mortality protection gap is significant, at $8,555 billion in 2014, having grown by 11 per cent per annum between 2004 and 2014, revealed by Mortality Protection Gap study by Swiss Re.<br><br>The report showed that for every $100 needed for protection, only &amp;7.8 of saving and insurance is in place for a typical Indian household, leaving a massive protection gap of $92.2.<br><br>Insurance has grown strongly in India but from a very low base. In 2014, India had life an insurance penetration rate of 2.6 per cent of gross domestic product. The study showed the sum insured per working person with dependents in India was still low at $2,101 in 2014 (about Rs 1.3 lakh). India ranked ninth with respect to per capita sum insured in 2014, among 13 Asia-Pacific markets examined in this study.<br><br>The study showed the size of the gap for the 13 Asia-Pacific markets stands at a staggering $58 trillion in 2014, compared to $42 trillion in 2010.<br><br>This represents the difference between the cover typically required by a family and the resources they have available should a wage-earner pass away suddenly. While the gap has increased slower in the past four years, it is still worryingly high and underlines the fragile nature of financial security for many families in the region.<br><br>This study compares and contrasts the mortality protection gap and its trend across the Asia-Pacific region. It provides insights into the stages of development of protection products in different markets and quantifies growth opportunities for life insurance.<br><br>In China, the protection gap has increased by an average of 17 per cent between 2004 and 2014, reaching $32,074 billion in 2014 from $6,540 billion in 2004. In India, the gap was $3,067 billion in 2004, which has since risen gradually in the last decade to $8,555 billion in 2014.<br><br>According to Clarence Wong, Chief Economist Asia, in Swiss Re, the increase of the foreign investment limit in Indian insurers to 49 per cent from 26 per cent in 2015 will help to bolster capital of the Indian insurance market and support a stronger drive to close the protection gap.<br><br>It is evident from India’s Mortality Protection Gap that there is an enormous need for long-term protection products. This is an important issue that needs to be addressed immediately. Government and the industry must work jointly on this for the overall financial well-being of the country.<br><br>(BW Online Bureau)</p>