Pre-launch Report of

Insurance Campaign

Survey

Awareness

SPONSORED BY

Insurance Regulatory and Development Authority

National Council of Applied Economic Research, 2011

All rights reserved, no part of this publication may be reproduced, stored in a retrieval system,or transmitted, in any form or by any means, electronic, mechanical, photocopying, recordingand/or otherwise, without the prior written permission of the publisher.

Published by

Printed at

Jatinder S. Bedi, Secretary & Head, Operations, for and on behalf of the National Council ofApplied Economic Research, Parisila Bhawan, 11, Indraprastha Estate, New Delhi110 002

M/s. Multiplexus (India), Delhi. Email: multiplexusindia@gmail.com

Study Team

Project Leader

Core Research Team

Consultant

Technical Support

Anushree Sinha

Rajesh JaiswalBarun Deb Pal

Kalicharan Shukla

Ramamani SundarGeetha Natesh

Sadhana Singh

Contents

List of Tables ix

List of Annexure Tables xi

Foreword xv

Preface xvii

Acknowledgements xix

Chapter 1: Background 1

Chapter 2: Methodology 9

Chapter 3: Socio-Economic Characteristics of Insured and Uninsured Households 13

1.1 Concept of Insurance 1

1.2 Importance of Insurance 2

1.3 Origin of Insurance 3

1.4 Origin and Development of Insurance in India 3

1.5 Important Developments in the History of Indian Insurance Business 3

1.6 Insurance Scenario in India and Other Countries 4

1.7 Insurance Penetration and Density in India 5

1.8 Why Awareness is Important 6

2.1 Coverage 9

2.2 Sample Design 9

2.3 Selection of the Rural Sample 9

2.4 Selection of the Urban Sample 10

3.1 Occupation and Education 13

3.2 Type of Dwelling Unit and Family 14

3.3 Type of Ration Card 16

3.4 Economic Status of the Households 17

3.5 Major Sources of Information 18

3.6 Types of Insurance Held 18

3.7 Details of Different Kinds of Policies Life, General and Health

held by Members of Households 19

viiPRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN

3.8 Opinion of Uninsured Households on Possible Economic Risks 23

3.9 Conclusion

4.1 Concept of Insurance 25

4.2 Major Source of Information on Insurance 26

4.3 Relevance of Insurance 27

4.4 What Kind of Tool is Insurance? 30

4.5 Losses that an Insurance Policy could Compensate 30

4.6 Benefits of Insurance vis--vis Other Savings 31

4.7 Benefits of Life Insurance 32

4.8 Benefits of Health Insurance 33

4.9 Decision to Take Insurance 34

4.10 Reasons for Not Taking Insurance 34

4.11 Perception on Financial Risks that Households could Face 35

4.12 Linking Insurance with Credit 35

4.13 Conclusion 36

5.1 Awareness of Life and Health Insurance Policies 37

5.2 Provision of Nomination Facility 37

5.3 Views on Mandatory Paper Work 37

5.4 Knowledge about Rights and Duties 38

5.5. Knowledge about Changing Mode of Premium and Cancellation of Policy 39

5.6 Knowledge Regarding Settlement of Claims 41

5.7 Households' Knowledge about Value of Policy if Surrendered Before Maturity,

Penalty for Non-payment of Premium, and Lapse of Policy 42

5.8 Awareness about Grievance and Dispute Resolution 43

5.9 Conclusion 44

6.1 Socio-economic Profile of the Insured and Uninsured Households 46

6.2 Insurance Awareness of Insured and Uninsured Households 47

6.3 Policy Recommendations 48

23

Chapter 4: Perception of Households about Insurance as a Concept and its Benefits 25

Chapter 5: Awareness Level of Insured Households about Various Aspects

of Insurance 37

Chapter 6: Conclusion 45

Annexture: State Tables 53

viii PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN

List of Tables

1.1 Important Developments in the History of the Indian Insurance Industry 4

2.1 Stratification of Households in Rural Areas 10

2.2 Sampling Fraction for City and Town Group 11

2.3 Stratification of Households in Urban Areas 11

3.1 Distribution of Households by Main Occupation and Level of Education 13

3.2 Distribution of Households by Ownership of Land, Dwelling Unit,Type of Dwelling Unit, Type of Family and Availability of Electricity Connection 15

3.3 Distribution of Households by Type of Ration Card 16

3.4 Distribution of Households by Economic Status: Income,Expenditure and Savings 17

3.5 Distribution of Households by Major Sources of Information 18

3.6 Distribution of Households by Type of Insurance Taken 18

3.7a Distribution of Household Members with Insurance byAnnual Per Capita Household Income Categories (Rural) 20

3.7b I Distribution of Household Members with Insurance byAnnual Per Capita Household Income Categories (Urban) 20

3.7c Distribution of Household Members with Insurance byAnnual Per Capita Household Income Categories (Rural + Urban) 20

3.8 Proportion of Policy Holders by Gender 21

3.9 Average Annual Premium and Average Policy Value by Income Class 22

3.10a Average Annual Premium as a Percentage of Annual HouseholdIncome (Rural) 22

3.10b Average Annual Premium as a Percentage of Annual HouseholdIncome (urban) 22

3.10c Average Annual Premium as a Percentage of AnnualHousehold Income (Total) 23

3.11 Income-wise Distribution of Uninsured Households Based on AmountThey Could Contribute for Possible Economic Risks 23

4.1a Distribution of Households Based on Their Concept of Insurance 25

4.1b Distribution of Households by Level of Education and Their Perception of Insurance 26

4.2 Distribution of Households by Their Major Source of Information on Insurance 27

4.3 Relevance of Insurance to Households and Reasons 28

ixPRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN

4.4a Distribution of Households by Their Perception about the Class toWhich Insurance is Relevant 29

4.4b Perception of Households on Class to Which Insurance is Relevant byAnnual Household Income Categories 29

4.5 Distribution of Households by Their Perception of Insurance as a Tool 30

4.6 Distribution of Households by Their Perception of the Extent toWhich Insurance Can Replace Losses 31

4.7 Distribution of Households by Their Perception of Benefits of Insurancevis--vis other Avenues of Savings 32

4.8 Distribution of Households Based on Awareness and Views aboutBenefits of Life Insurance Policies 32

4.9 Distribution of Households Based on Their Awareness and Views aboutBenefits of Health Insurance 33

4.10 Distribution of Insured Households by Factors Influencing TheirDecision to Take Insurance 34

4.11 Distribution of Uninsured Households by Reasons for No MemberBeing Insured 34

4.12 Perception of Uninsured Households by Type of Financial RisksThey Could Face 35

4.13 Distribution of Uninsured Households by Their Views on LinkingInsurance with Credit 36

5.1 Distribution of Insured Households by the Opinion aboutMandatory Paper Work 38

5.2 Distribution of Households by Knowledge about Rights and Duties asPolicy Holders by Level of Education of the Households 39

5.3 Distribution of Households on the Basis of Their Knowledge aboutPolicy by Level of Education 40

5.4 Distribution of Households on the Basis of Their Knowledge aboutSettlement of Claims by Level of Education 41

5.5 Distribution of Households on the Basis of Knowledge about Amount to beReceived if Surrendered Before Maturity, Penalty If Premium not Paid, andLapse of Policy 43

5.6 Distribution of Households on the Basis of Knowledge about Grievance andDispute Resolution by Level of Education 44

x PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN

List of Annexure Tables

S3.1a Distribution of Households by Their Level of Occupation (Insured) 55

S3.1b Distribution of Households by Their Level of Occupation (Uninsured) 56

S3.1c Distribution of Households by Their Level of Occupation (Insured + Uninsured) 57

S3.1d Distribution of Households by Their Highest Level of Education (Rural) 58

S3.1e Distribution of Households by Their Highest Level of Education (Urban) 59

S3.1f Distribution of Households by Their Highest Level of Education (Rural + Urban) 60

S3.2a Distribution of Households by Type of Dwelling Unit and Availability of

Electricity Connection (Rural) 61

S3.2b Distribution of Households by Type of Dwelling Unit and Availability of

Electricity Connection (Urban) 62

S3.2c Distribution of Households by Type of Dwelling Unit and Availability of

Electricity Connection (Rural+Urban) 63

S3.3a Distribution of Households by Ration Card (Insured) 64

S3.3b Distribution of Households by Ration Card (Uninsured) 65

S3.3c Distribution of Households by Ration Card (Insured + Uninsured) 66

S3.4a 67

S3.4b 68

S3.4c Distribution of Households by Major Source of Information

(Uninsured) 69

S3.4d Distribution of Households by Major Source of Information

(Uninsured) 70

S3.4e Distribution of Households by Major Source of Information

(Insured + Uninsured) 71

S3.4f Distribution of Households by Major Source of Information

(Insured + Uninsured) 72

S3.5a Distribution of Households by Type of Insurance Taken (Insured) 73

S3.5b Distribution of Households by Type of Insurance Taken (Insured) 74

S3.5c Distribution of Households by Type of Insurance Taken (Uninsured) 75

S3.5d Distribution of Households by Type of Insurance Taken (Uninsured) 76