Insurance as a Wealth Protector: A Growing Trend By Rakesh Jain

Published By: The Economic Times

Published Date: 08-03-2023

In an insightful discussion, Rakesh Jain, CEO of Reliance General Insurance, addresses the implementation of mandatory motor insurance in India and its potential impact.

Jain emphasises that third-party liability insurance is fundamentally designed to protect people on roads by ensuring vehicle owners can indemnify those they might injure while driving. Despite being legally required, execution gaps have persisted due to inconvenient renewal processes in the paper-based era. The digital transformation has created significant opportunities. With the Vahan database containing all vehicle records and IRDAI data identifying uninsured vehicles, implementation has moved to digital platforms. However, effective enforcement requires state machinery involvement, including police and RTOs. The existing Rs 2,000 penalty for uninsured vehicles isn't new, but traditional enforcement methods are impractical. Jain suggests linking insurance verification to digital systems like FASTag or PUC certificates to identify uninsured vehicles easily.

The market potential is substantial. Two-wheelers represent the largest segment of uninsured vehicles, with premiums often below Rs 1,000. About one-third of private cars also lack insurance. Full compliance could generate approximately 40,000 crore rupees in insurance premiums and 7,000-7,200 crore rupees in GST revenue.

Jain highlights that motor insurance is crucial for vehicle owners, as courts can enforce substantial claims against them. With potential payouts reaching crores for accidents involving high-income victims, insurance provides essential financial protection.

Urban vehicle owners show greater awareness of their responsibilities, while rural markets are catching up. New distribution channels like banking correspondents and the Bima Sugam platform could improve rural access. Jain concludes that positioning insurance as a ""protector of wealth"" is emerging as a significant trend across India.