1.Pre-launch Survey Report ofInsurance Awareness CampaignSPONSORED BYInsurance Regulatory and Development Authority

2. National Council of Applied Economic Research, 2011All 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 byJatinder S. Bedi, Secretary & Head, Operations, for and on behalf of the National Council ofApplied Economic Research, Parisila Bhawan, 11, Indraprastha Estate, New Delhi110 002Printed atM/s. Multiplexus (India), Delhi. Email: multiplexusindia@gmail.com 3. Study TeamProject LeaderAnushree SinhaCore Research TeamRajesh JaiswalBarun Deb Pal Kalicharan ShuklaConsultantRamamani Sundar Geetha NateshTechnical Support Sadhana Singh 4. ContentsList of Tables ixList of Annexure TablesxiForewordxvPrefacexviiAcknowledgements xixChapter 1: Background11.1 Concept of Insurance 11.2 Importance of Insurance21.3 Origin of Insurance31.4 Origin and Development of Insurance in India 31.5 Important Developments in the History of Indian Insurance Business 31.6 Insurance Scenario in India and Other Countries41.7 Insurance Penetration and Density in India 51.8 Why Awareness is Important 6Chapter 2: Methodology 92.1 Coverage 92.2 Sample Design92.3 Selection of the Rural Sample92.4 Selection of the Urban Sample 10Chapter 3: Socio-Economic Characteristics of Insured and Uninsured Households 133.1 Occupation and Education133.2 Type of Dwelling Unit and Family143.3 Type of Ration Card 163.4 Economic Status of the Households 173.5 Major Sources of Information183.6 Types of Insurance Held 183.7 Details of Different Kinds of Policies Life, General and Health held by Members of Households 19 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN vii 5. 3.8 Opinion of Uninsured Households on Possible Economic Risks23 3.9 Conclusion23 Chapter 4: Perception of Households about Insurance as a Concept and its Benefits 25 4.1 Concept of Insurance25 4.2 Major Source of Information on Insurance26 4.3 Relevance of Insurance27 4.4 What Kind of Tool is Insurance? 30 4.5 Losses that an Insurance Policy could Compensate30 4.6 Benefits of Insurance vis--vis Other Savings 31 4.7 Benefits of Life Insurance32 4.8 Benefits of Health Insurance33 4.9 Decision to Take Insurance34 4.10 Reasons for Not Taking Insurance 34 4.11 Perception on Financial Risks that Households could Face 35 4.12 Linking Insurance with Credit35 4.13 Conclusion 36 Chapter 5: Awareness Level of Insured Households about Various Aspects of Insurance37 5.1 Awareness of Life and Health Insurance Policies 37 5.2 Provision of Nomination Facility37 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 Policy39 5.6 Knowledge Regarding Settlement of Claims41 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 Resolution43 5.9 Conclusion44 Chapter 6: Conclusion 45 6.1 Socio-economic Profile of the Insured and Uninsured Households46 6.2 Insurance Awareness of Insured and Uninsured Households 47 6.3 Policy Recommendations48 Annexture: State Tables 53viii PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 6. List of Tables1.1Important Developments in the History of the Indian Insurance Industry42.1Stratification of Households in Rural Areas102.2Sampling Fraction for City and Town Group112.3Stratification of Households in Urban Areas113.1Distribution of Households by Main Occupation and Level of Education 133.2Distribution of Households by Ownership of Land, Dwelling Unit, Type of Dwelling Unit, Type of Family and Availability of Electricity Connection 153.3Distribution of Households by Type of Ration Card163.4Distribution of Households by Economic Status: Income, Expenditure and Savings173.5Distribution of Households by Major Sources of Information 183.6Distribution of Households by Type of Insurance Taken183.7a Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories (Rural)203.7b I Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories (Urban)203.7c Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories (Rural + Urban)203.8Proportion of Policy Holders by Gender 213.9Average Annual Premium and Average Policy Value by Income Class223.10a Average Annual Premium as a Percentage of Annual HouseholdIncome (Rural)223.10b Average Annual Premium as a Percentage of Annual HouseholdIncome (urban)223.10c Average Annual Premium as a Percentage of AnnualHousehold Income (Total)233.11 Income-wise Distribution of Uninsured Households Based on Amount They Could Contribute for Possible Economic Risks234.1a Distribution of Households Based on Their Concept of Insurance 254.1b Distribution of Households by Level of Education and Their Perception of Insurance 264.2Distribution of Households by Their Major Source of Information on Insurance 274.3Relevance of Insurance to Households and Reasons 28 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN ix 7. 4.4a Distribution of Households by Their Perception about the Class to Which Insurance is Relevant 294.4b Perception of Households on Class to Which Insurance is Relevant by Annual Household Income Categories294.5Distribution of Households by Their Perception of Insurance as a Tool 304.6Distribution of Households by Their Perception of the Extent to Which Insurance Can Replace Losses314.7Distribution of Households by Their Perception of Benefits of Insurance vis--vis other Avenues of Savings324.8Distribution of Households Based on Awareness and Views about Benefits of Life Insurance Policies 324.9Distribution of Households Based on Their Awareness and Views about Benefits of Health Insurance334.10 Distribution of Insured Households by Factors Influencing Their Decision to Take Insurance344.11 Distribution of Uninsured Households by Reasons for No Member Being Insured 344.12 Perception of Uninsured Households by Type of Financial Risks They Could Face 354.13 Distribution of Uninsured Households by Their Views on Linking Insurance with Credit 365.1Distribution of Insured Households by the Opinion about Mandatory Paper Work385.2Distribution of Households by Knowledge about Rights and Duties as Policy Holders by Level of Education of the Households395.3Distribution of Households on the Basis of Their Knowledge about Policy by Level of Education405.4Distribution of Households on the Basis of Their Knowledge about Settlement of Claims by Level of Education415.5Distribution of Households on the Basis of Knowledge about Amount to be Received if Surrendered Before Maturity, Penalty If Premium not Paid, and Lapse of Policy 435.6Distribution of Households on the Basis of Knowledge about Grievance and Dispute Resolution by Level of Education44x PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 8. List of Annexure TablesS3.1a Distribution of Households by Their Level of Occupation (Insured)55S3.1b Distribution of Households by Their Level of Occupation (Uninsured)56S3.1c Distribution of Households by Their Level of Occupation (Insured + Uninsured)57S3.1d Distribution of Households by Their Highest Level of Education (Rural)58S3.1e Distribution of Households by Their Highest Level of Education (Urban) 59S3.1f Distribution of Households by Their Highest Level of Education (Rural + Urban) 60S3.2a Distribution of Households by Type of Dwelling Unit and Availability ofElectricity Connection (Rural) 61S3.2b Distribution of Households by Type of Dwelling Unit and Availability ofElectricity Connection (Urban) 62S3.2c Distribution of Households by Type of Dwelling Unit and Availability ofElectricity Connection (Rural+Urban) 63S3.3a Distribution of Households by Ration Card (Insured)64S3.3b Distribution of Households by Ration Card (Uninsured)65S3.3c Distribution of Households by Ration Card (Insured + Uninsured)66S3.4a Distribution of Households by Major Source of Information to Households (Insured) 67S3.4b Distribution of Households by Major Source of Information to Households (Insured) 68S3.4c Distribution of Households by Major Source of Information to Households(Uninsured)69S3.4d Distribution of Households by Major Source of Information to Households(Uninsured)70S3.4e Distribution of Households by Major Source of Information to Households(Insured + Uninsured)71S3.4f Distribution of Households by Major Source of Information to Households(Insured + Uninsured)72S3.5a Distribution of Households by Type of Insurance Taken (Insured)73S3.5b Distribution of Households by Type of Insurance Taken (Insured)74S3.5c Distribution of Households by Type of Insurance Taken (Uninsured)75S3.5d Distribution of Households by Type of Insurance Taken (Uninsured)76S4.1a Distribution of Households Based on Their Perception about Insurance (Rural) 77PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN xi 9. S4.1b Distribution of Households Based on Their Perception about Insurance (Urban) 78S4.1c Distribution of Households Based on Their Perception aboutInsurance (Rural+Urban)79S4.2a Distribution of Households by Their Major Source of Information onInsurance (Rural)80S4.2b Distribution of Households by Their Major Source of Information onInsurance (Urban)81S4.2c Distribution of Households by Their Major Source of Information onInsurance (Rural + Urban)82S4.3a Distribution of Households Reporting Relevance of Insurance by Reasons(Insured)83S4.3b Distribution of Households Reporting Relevance of Insurance byReasons (Uninsured)84S4.3c Distribution of Households Reporting Relevance of Insurance by Reasons(Uninsured: Rural + Insured) 85S4.3d Distribution of Households Reporting Non-relevance of Insurance by Reasons(Uninsured)86S4.4a Distribution of Households Based on Their Perception about the Class toWhich Insurance Is Relevant (Rural)87S4.4b Distribution of Households Based on Their Perception about theClass to Which Insurance Is Relevant (Urban) 88S4.4c Distribution of Households Based on Their Perception about the Class toWhich Insurance Is Relevant (Rural+Urban)89S4.5a Distribution of Households Based on Their Perception about Insuranceas a Tool (Rural)90S4.5b Distribution of Households Based on Their Perception about Insuranceas a Tool (Urban)91S4.5c Distribution of Households Based on Their Perception about Insuranceas a Tool (Rural + Urban)92S4.6a Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Physical Losses (Rural)93S4.6b Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Physical Losses (Urban)94S4.6c Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Physical Losses (Rural + Urban)95S4.6d Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Financial Losses (Rural) 96S4.6e Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Financial Losses (Urban) 97S4.6f Distribution of Households Based on Their Perception about the Extent toWhich Insurance Can Replace Financial Losses (Rural + Urban) 98xii PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 10. S4.7a Distribution of Households by Their Perception about Benefits ofInsurance vis--vis Other Avenues of Savings (Rural) 99S4.7b Distribution of Households by Their Perception about Benefits ofInsurance vis--vis Other Avenues of Savings (Urban)100S4.7c Distribution of Households by Their Perception about Benefits ofInsurance vis--vis Other Avenues of Savings (Rural + Urban)101S4.8Distribution of Households by Their Awareness and Views of Benefits ofLife Insurance Policies (Rural + Urban) 102S4.9Distribution of Households by Their Awareness and Views of Benefits ofHealth Insurance Policies (Insured) 103S4.10 Distribution of Households by Factors Influencing Their Decision toTake Insurance104S4.11a Distribution of Uninsured Households by Reasons For No Households Member Insured (Rural) 105S4.11b Distribution of Uninsured Households by Reasons for No Household Member Insured (Urban) 106S4.11c Distribution of Uninsured by Reasons for No Household Member Insured (Rural + Urban)107S4.12 Distribution of Uninsured Households by Type of Financial Risk TheyCould Face108S4.13 Distribution of Uninsured Households by Views on Linking ofInsurance with Credit 109S4.13a Distribution of Uninsured Households by Views on Whether Insurance Would Help Unexpected Eventuality110S5.1Percentage Distribution of Insured Households by Awareness aboutProvision of Nomination Facility1115.2aDistribution of Insured Households by Perception about MandatoryPaper Work at the Time of Taking Policy 1125.2bDistribution of Insured Households by Perception about MandatoryPaper Work at the Time of Claim Settlement113S5.3Distribution of Households by Awareness about Rights as Policy Holder(Insured) 114S5.4Distribution of Households by Awareness about Duties as aPolicy Holder (Insured) 115S5.5Percentage of Households by "What Households Would Do If TheyAre Not Satisfied With the Mode of Premium" (Insured) 116S5.6Percentage of Households by Knowledge about "When a Policy CanBe Cancelled" (Insured) 117S5.7Percentage of Households by Knowledge about "What Are theVarious Assignments in the Policy" (Insured)118S5.8Percentage of Households by Knowledge About "When Claims ofInsurance Get Settled" (Insured)119PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN xiii 11. S5.9Percentage of Households by Knowledge about Procedures Involved InInsurance Settlement (Insured)120S5.10 Percentage of Households by Knowledge about Time Taken forSettlement of Claims (Insured)121S5.11 Percentage of Households by Knowledge about Amount of the FaceValue to Receive If Policy Is Surrendered Before Maturity (Insured) 122S5.12 Percentage of Households by Knowledge about Penalty If Premium IsPaid After Due Date (Insured) 123S5.13 Percentage of Households by Knowledge about Reasons for Loss ofInsurance Coverage and Policy Lapse (Insured)124S5.14 Percentage of Households By Knowledge About Possibility of Revival ofLapsed Policy (Insured) 125S5.15 Percentage of Households by Views on Possible Cause forDispute/Differences with Insurance (Insured)126S5.16 Percentage of Households by Knowledge about What Needs to beDone in Case of Any Disagreement (Insured)127xiv PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 12. ForewordAn individual is exposed to various risks in daily life and it will surprise one to note how many ofthese can actually be insured. Life insurance and general insurance companies offer a variety ofproducts covering different types of risks. Not only is there a dearth of knowledge about these butalso most individuals are not aware of the value that insurance, as an option, could add to their lives.While affordability and the place of insurance in the list of an individuals priority in this context areimportant questions, quite a few are uninsured purely due to lack of awareness about insurance as aprotection tool and details about the types of insurances that are possible. All stakeholders have theresponsibility of creating this awareness. It is in this context that the Insurance Regulatory andDevelopment Authority (IRDA) engaged the National Council of Applied Economic Research(NCAER) to carry out a pan India survey about awareness levels about insurance both amongst theuninsured and insured population. I have read, with interest, the findings of the survey and amindeed happy to present the report.I am quite sure that this survey is one of its kind anywhere in the world. The universe covered andthe geographical outreach in spite of various physical and social challenges involved has been anachievement and I commend NCAER for its efforts. A three-stage stratified sample design wasadopted and primary survey undertaken in 29 states/union territories of India over a period of 6months. The outcome is a comprehensive report that gives information along with tabulationsregarding various parameters such as awareness regarding major source of information oninsurance, the extent to which insurance is seen as a protection/savings tool, benefits of insurancevis-a-vis other savings tools, awareness about benefits of health insurance, what influenceshouseholds to take insurance and why people do not opt for insurance, etc.The report covers details about the various geographies covered. Both rural and urban areas arerepresented in the samples.The findings, based on the rural-urban divide, on various parameters areinterestingin some cases the findings are similar, in others quite varied.The findings based on theinsured-uninsured dichotomy are also contained in the report. From giving a picture of the socio-economic profile of the insured and the uninsured to specific parameters relating to life as well asgeneral insurance, the report makes useful reading for all categories of individualsmembers of thegeneral public, the insured and all stakeholders of the insurance industry. Some of the conclusionsmay be foregone and obvious, but here is a report that provides concrete data for these. PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGNxv 13. I thank NCAER for the well brought out report, as well as the IRDA team involved in interactingand coordinating with NCAER from the stage of formulation of the objectives of the survey andstructuring of the questionnaire, to finalization of the report. J. HARI NARAYAN ChairmanInsurance Regulatory and Development Authorityxvi PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 14. PrefaceInsurance markets in India are showing clear signs of expansion, requiring insurers to be innovativein their approach towards achievement of sustainable growth. The report explores underlyingtrends in customer awareness levels and their implications on insurers.The report is based on a survey of 30,200 respondents spread over 29 states and union territories.NCAER queried respondents on their awareness levels regarding rights, policyholders protection,types of insurance products and benefits of insurance. The study also generated a socio-economicprofile of insured and uninsured population. In studying the aggregate data, we were able to identifydistinct indicator-based segments, and compared how different segments perceive insurancedifferently.The intention of this report is to inform various insurers regarding the range and complexity ofinsurance awareness issues.The report will equip insurance companies with a ready reference to thefundamental aspects of business. The aim of this report is to reach those with limited knowledge ofinsurance and to provide a comprehensive picture of the awareness scenario across the country.Starting with the history of insurance sector, the report charts out a course of insurance awarenessparameters. First the concept, importance, origin and development of insurance is dealt withfollowed by the methodology. Methodology is followed by an exposition of the socio-economiccharacteristics of the insured and uninsured households. The almost revealing perception ofhouseholds about insurance as a concept and its benefits is detailed in the following chapter. A moreready understanding has been detailed with regard to benefits of insurance. Awareness levels of theinsured households about various aspects of insurance are elaborated in the next chapter. Eachchapter is dealt with comprehensively and yet compendiously and each is accorded appropriatesignificance in the chapter conclusions. There is also a final chapter concluding the report whichalso provides policy recommendations.The information contained in this report is quite diverse. It is structured for easy comprehension ofpolicy makers and insurers of the ground realities. The analysis too is quite diverse.The emphasis isplaced on findings from respondents of the desired role and significance for the insurance business. Ihope that armed with the assessment of the report, the propagators of insurance would gain greaterappreciation of the significance of their role and that of the other players in the business.The reportrecognizes that some readers may merely wish to use this from time to time to refresh their insight.PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGNxvii 15. It also affords a logical progression of issues for those who wish to embark upon a more completeand systematic study of the subject. Finally, it provides insight for insurers to make a moremeaningful impact on the lives of people they provide services to.xviii PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 16. AcknowledgementsWe acknowledge the valuable support from IRDA in conducting this study. In particular, we wouldlike to thank Mr Hari Narayan and Mr A. Girdhar for commissioning the study to NCAER. Ourspecial thanks go to Ms Yegnapriya Bharath for her untiring support and coordination during theentire study and providing feedback at various critical junctures of the study. We are really gratefulto her for her continuous and sustained cooperation. We also thank Mr Srinivas Rao for his help infacilitating the study. Further, we are thankful to Mr Manoj Asiwal for providing necessaryadministrative support.We would be amiss if we do not thank all the sample respondents across the country for providingthe requisite data and information to NCAERs field investigators. But for their generous help, itwould not have been possible to give to the study its present shape. Moreover, we are grateful to allour field staff for collecting the necessary information from the sample respondents across thecountry.Thanks are also due to Mr Suman Bery who was the Director General when the study wascommissioned and Dr Shekhar Shah, the current Director General, NCAER whose fullencouragement helped the core team in completing this study in time. PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGNxix 17. BackgroundInsurance occupies an important place inthe complex modern world since risk, whichcan be insured, has increased enormously in unexpected event. The transaction involves the insured assuming a guaranteed and known, relatively small, loss in the form of payment to1every walk of life. This has led to growth in thethe insurer in exchange for the insurersinsurance business and evolution of variouspromise to compensate or indemnify thetypes of insurance covers. The insurance sectorinsured in the case of a large, possiblyacts as a mobiliser of savings and a financial devastating, loss. The insured receives aintermediary and is also a promoter of contract called an insurance policy whichinvestment activities. It can play a significant details the conditions and circumstances underrole in the economic development of a country, which the insured will be compensated.while economic development itself can Insurance can be classified broadly into: (a)facilitate the growth of the insurance sector. life insurance, and (b) general or non-lifeThis chapter provides an overview of the insurance.insurance sector in India, its origin and growth.(a) Life insurance or life assurance is a contractIt begins by defining insurance as a concept, between the policy owner and the insurer,followed by a discussion on the importance of where the insurer agrees to pay theinsurance for individuals, households, and thedesignated beneficiary a sum of moneyeconomy. The penetration of the insurance upon the occurrence of the insuredbusiness and insurance density in India are individuals death or other event, such ascompared with those in other countries. The terminal or critical illness. In return, theneed to create and enhance the level of policy owner agrees to pay a stipulatedawareness about different aspects of insuranceamount at regular intervals or in lumpis also discussed.sums. Life-based contracts tend to fall intotwo major categories:1.1 Concept of Insurance Protection policies: designed to Insurance is a form of risk managementprovide a benefit in case of a specifiedwhich is used primarily to hedge against the event, typically against lump sumrisk of a contingent, uncertain loss. Insurance is payment. A common form of thisdefined as the equitable transfer of the risk of policy is term insurance.loss, from one entity to another, in exchange for Investment policies: the mainpayment. Insurance is essentially an objective is to facilitate the growth ofarrangement where the losses experienced by acapital by single or regular premiums.few are extended among many who are exposedThe common forms in this categoryto similar risks. It is a protection against include whole life, universal life andfinancial loss that may occur due to anvariable life policies.PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN1 18. (b) General insurance or non-life insurance Investment of accumulated resources by policies, including automobile and the insurer facilitates the overall development homeowners policies, provide payments of the country. Capital is usually risk averse, but depending on the loss from a particularif insurers provide protection against risks, then financial event. General insurance typically several investors would come forward to invest comprises any insurance cover that is nottheir funds. deemed to be life insurance. In many developed countries, citizens are Some categories of general insurance to a certain extent protected by social securitypolicies are: vehicle, home, health, property,schemes provided by the government. Theseaccident, sickness and unemployment, casualty,schemes offer financial aid to citizens who areliability, and credit. The terms of insurance eligible on grounds of unemployment, old age,generally depend on the company providing the sickness, disability, etc. The social securitycover.scenario in India is quite different, havingtraditionally been the responsibility of the1.2 Importance of Insurance family or community. However, withLife insurance is generally considered a meansindustrialization, urbanization, breakup of theof protecting ones family against thejoint family system and weakening of familyunforeseeable circumstance of the death of an bondage, it has become necessary to provideearning member. However, there are a number social security arrangements that areof other benefits that are not apparent. Some institutionalized and regulated by the statebenefits accrue to the individuals and theirrather than the society.families, while others assist economicIssues relating to social security are listed indevelopment. For instance, an insurance the directive principles of state policy. Whilecompany takes the risk of large and uncertain social security and insurance, employment andlosses in exchange for small premiums. This unemployment form Item 23 of the concurrentgives a sense of confidence and security to the list, the welfare of labour including conditionsinsured individual through the protection ofof work, provident fund, employees liability,insurance in the event of an unfortunateworkmens compensation, invalidity and oldincident. In large sized commercial and age pension and maternity benefits form Itemindustrial organizations, it facilitates24, also of the concurrent list. During the initialoperations as many of the risks are transferred years of development planning, it was believedto the insurer. that with the process of development, a greater Insurance, particularly life insurance, is number of workers would join the organisedone of the ways of providing for the future. Asector and eventually get covered by formallife insurance policy which gives an annuity is a social security arrangements. However, thecombination of protection and investment. Itactual experience has proved otherwise. Thereincreases the creditworthiness of the assured is now almost a stagnation of employment inperson because it can provide funds for the organised sector with increase in the inflowrepayment in the event of death. It also reducesof workers into the informal sector. Thelosses owing to theft, robbery, fire accidents, unorganised workforce is characterised byetc. In addition, it serves as a solution to social scattered and fragmented areas of employment,problems. For instance, while compensation is seasonality, lack of job security and lowavailable to victims of industrial injuries and legislative protection. Currently, out of anroad accidents, financial difficulties on account estimated workforce of nearly 400 million, onlyof old age, disability or death is minimised. less than 10 per cent have the benefits of formal2 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 19. social security protection. Although the and the last three decades of nineteenth centurygovernment has a few centrally funded social saw the emergence of the Bombay Mutual Lifeassistance programmes like National Old AgeAssurance Society (1871), which became theSchemes and National Family Benefitfirst organisation to charge the same premiumSchemes, the number of people covered as wellfrom all residents of India irrespective of theiras the benefits is very meagre. Furthermore, in aorigin or nationality. The Oriental (1874) andcountry like India, where there is no provisionEmpire of India (1897) insurance companiesfor unemployment benefits, the concept ofbegan their activities in the Bombay Residencyinsurance becomes extremely important. in the late nineteenth century. This period, however, was dominated by foreign insurance1.3 Origin of Insuranceoffices such as Albert Life Assurance, RoyalMaritime insurance is the oldest form of Insurance, and Liverpool and London Globeinsurance and is followed by life insurance andInsurance, which did good business in India.fire insurance. Insurance was prevalent inThe history of general insurance can beancient Greece and among the maritimetraced to the Industrial Revolution in the Westpeoples with whom the Greeks traded. Itand the consequent growth of sea-faring tradedeveloped first as a means of spreading the huge and commerce. A legacy of British rule,risks involved in early maritime enterprises,General Insurance in India has its roots in theevolving much later during the fourteenthestablishment of Triton Insurance Companycentury in the commercial cities of Italy. ThisLtd in 1850 in Calcutta. Its first Indianpractice of marine insurance gradually spread to counterpart, the Indian Mercantile InsuranceLondon during the sixteenth century. The Ltd, which launched its operation in Bombayhistory of marine insurance is closely associatedin 1907, was the first company of its type towith the origin and rise of Lloyds group of transact all general insurance business.ship-owners. Today, Lloyds is considered thelargest underwriter in the world. In the USA,1.5 Important Developments in thethe first insurance company was established by History of Indian Insurance BusinessBenjamin Franklin in 1752. Since the mid-Before deregulation in 1999, the insurancenineteenth century, insurance has developedindustry in India consisted of only two statesignificantly to cover other kinds of risks. insurers, namely Life Insurance Corporation of India (LIC) for life insurance, and General1.4 Origin and Development ofInsurance Corporation of India (GIC) with itsInsurance in India four subsidiaries for general insurance.In India, the history of life insurance can be According to the Insurance Regulatory andtraced to 1818 when Anita Bhavsar started theDevelopment Authority (IRDA), the insuranceOriental Life Insurance Company in Kolkata.industry in India at present consists of 24 generalThis organisation was basically founded to insurance companies including specialisedserve European clients and hence Indians who insurers such as Export Credit Guaranteeopted for an insurance cover were charged aCorporation of India and the Agriculturalmuch higher premium. The reason given wasInsurance Corporation of India, and 23 lifethat Indians had a lower life expectancy oninsurance companies. Of the 22 insurers who setaccount of their lifestyle, while in fact this was a up operations in life insurance after the industryplanned effort to keep Indians out of any kind was opened up for the private sector, 20 are jointof progress. The company failed in 1834. Then, ventures with foreign companies. Similarly, ofin 1870 the British Insurance Act was passed the 17 non-life insurers, including healthPRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 3 20. insurers operating in the private sector, 16 are in were introduced and these included productscollaboration with foreign partners. Thus, 36 liability, corporate cover, professionalinsurance companies in the private sector are indemnity policies, weather insurance, creditoperating in collaboration with well-establishedinsurance and travel insurance.foreign companies. Table 1.1 shows important developments Prior to the opening up of insurance for the in the history of the Indian insurance industry. TABLE 1.1: Important Developments in the History of the Indian Insurance IndustryYear Description of New Developments and Important Events1912 The Life Insurance Companies Act was passed, making it mandatory for companies to get their premium rate tables certified by an actuary.1938 The Insurance Act of 1938 became the first legislation governing all forms of insurance to provide strict state control over insurance business.1956 Life insurance in India was completely nationalised on January 19 by means of the Life Insurance Corporation Act. All 245 existing companies operating in the country were merged into one entity, namely the Life Insurance Corporation of India (LIC)1957 The General Insurance Council, a wing of the Insurance Association of India, was formed and framed a code of conduct for ensuring fair conduct and sound business practices.1968 The Insurance Act of 1938 was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up.1972 The General Insurance Business (Nationalisation) Act was passed. With effect from January 1, 1973 107 companies were amalgamated and grouped into four companies, namely National Insurance Company Ltd., Oriental Insurance Company Ltd., New India Assurance Company Ltd and United India Insurance Company Ltd.1993 The Government of India set up a committee under the chairmanship of RN Malhotra, then Governor of the Reserve Bank of India, to propose recommendations for reforms in the insurance sector that would complement the reforms in the financial sector.1994 The Amphora Committee submitted its report, recommending that entry of the private sector be permitted in the insurance sector and that foreign companies be allowed entry by floating Indian companies, preferably as joint ventures with Indian partners.1996 Following the recommendation of the Malhotra Committee, an interim Insurance Regulatory Authority was set up.1999 The Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objective of IRDA includes promotion of competition in order to improve customer satisfaction through increased customer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA deregulated the insurance sector and permitted the entry of private companies. Foreign investment was also allowed and capped at 26 per cent holding in the Indian insurance companies.2006 The Actuaries Act was passed to give the profession statutory status on par with chartered accountants, notaries, cost and works accountants, advocates, architects and company secretaries.private sector, non-life products were limited1.6 Insurance Scenario in India andand were classified on the basis of their beingOther Countriesregulated by tariffs or otherwise. Those such asFor 2009, which is the latest year for whichfire insurance, motor vehicle insurance, data are available, some pointers are:engineer ing insurance and worker s(i) the share of the Indian life insurance sectorcompensation came under tariff regulationin the global market was 2.45 per cent;while others such as burglary insurance,(ii) the share of Indian non-life insurancemediclaim, and personal accident insurance didpremium in the global non-life premiumnot. In addition, most specialised insurancewas as low as 0.46 per cent;products, such as race horse insurance, did not(iii) in life insurance business India rankedfall under tariff regulation. After the openingninth among 156 countries; andup of the sector to private players, new products(iv) in non-life insurance business India ranked4 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 21. 26th among the same countries.(over 40 per cent per annum), by enhancingThere are other pointers as well (IRDA, product awareness and promoting consumer2009 - 10), namely: education and information. However, the(i) the Indian life insurance industry recorded market is still in a nascent stage.a premium income of Rs 2,65,450 crore in200910 as against Rs 2,21,785 crore in the 1.7 Insurance Penetration and Densityprevious year;in India(ii) in the life insurance sector, the share of the Two important indicators of the level ofprivate sector in total premium income wasdevelopment of the insurance sector in anyapproximately 30 per cent in both 200809 country are:and 200910;(i) level of insurance penetration which is(iii) while LIC, which represents the public measured as the percentage of insurancesector, registered a growth of 19.69 per centpremium in gross domestic productin 200910 over 200809, the growth of (GDP); andthe private sector was higher at 23.06 per(ii) insurance density ratio (wherein insurancecent during this period; density is defined as the per capita(iv) the gross direct premium income of theexpenditure on insurance premium and isnon-life insurance sector in India was Rsdirectly correlated with per capita GDP).30,351.83 crore in 200809 and RsBoth insurance penetration and density34,620.45 core in 200910; andhave increased significantly over the years,(v) in the non-life insurance industry, the especially with the opening up of the insuranceshare of the public sector in gross directindustry to the private sector. However, thepremium income was approximately 59 per increase has been marginal as far as the non-lifecent in both 200809 and 200910. insurance sector is concerned. While theMoreover, while the public sector density of life insurance in India grew fromregistered a growth of 14.49 per cent inUS$ 9.1 in 2001 to US$ 47.7 in 2009, the200910, the growth in private sector gross density in the non-life insurance industry fordirect premium income was lower at 13.44the same period grew from US$ 2.4 to US$ 6.7.per cent. Similarly, penetration in the life insuranceA recent study by McKinsey & Companysector increased from 2.15 per cent in 2001 toindicates that consumers have an unmet need 4.60 per cent in 2009 and very marginally in thefor long-term savings products and a preference non-life insurance sector from 0.56 per cent infor insurance vis--vis other investment2001 to 0.60 per cent in 2009. Thus,products. Consumers rank insurance higher penetration in the non-life insurance sector hasthan other investment options because of theremained virtually constant over the years.ease and convenience in investing, and inIndias insurance penetration is lower thanobtaining tax benefits and protection cover.the world average which in 2009 was 7.0 perIndian consumers perceive life insurance as a cent, while for India it was 5.2 per cent.low-risk and high-return investment, this Although, the penetration of Indian insurancebeing a perception driven by the awareness of is higher than that of some South AsianLICs performance and its record of deliveringcountries like Pakistan (0.7%), Bangladeshstable returns over the years. According to the (0.9%) and Sri Lanka (1.4%), it lags behindstudy, Indias insurance market has grown overother Asian countries like Japan (9.9%), Souththe past six years. Liberalisation of the sectorKorea (10.4%) and Singapore (6.8%).has enabled the entry of a number of newHowever, in the life insurance sector, Indiasplayers who have contributed to the growth, performance in terms of percentage of PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 5 22. penetration at 4.6 per cent is comparable withdecisions for themselves and their families,some developed countries and is above the increasing their economic security and wellworld average of 4.0 per cent. In the non-lifebeing. Secured families are more involved ininsurance sector, India with 0.6 per cent their communities as home owners and voters.lags behind the world penetration average ofThey are more involved as parents with their3.0 per cent. (Source: Swiss Re as given in childrens schools and teachers, enabling betterIRDA, 200910). educational and economic outcomes for their Several factors are responsible for the lowchildren. They contribute to vital, thrivinglevels of insurance penetration in the country. communities, further fostering communityThese include low consumer preference,economic development.Thus, being financiallyuntapped rural markets and constrainedliterate is not only important to the individualdistribution channels. In urban areas, life household and family, it is also important toinsurance penetration in the market iscommunities and societies. (Hogarth, Jeanneapproximately 65 per cent, and is considerablyM., 2006).lesser in the low-income unbanked segment. InInsurance companies can address therural areas, life insurance penetration in theproblem of financial illiteracy of consumers bybanked segment is estimated to be educating them. This point was corroboratedapproximately 40 per cent, and at best is by the Max New YorkNCAER surveymarginal in the unbanked segment. Before(NCAER, 2008) which showed that evenopening the sector to private insurers, it was felt though a majority of Indian households arethat low levels of insurance penetration were good savers, they do not undertake financialdue to ineffective market strategies adopted by planning and are financially at risk. HouseholdsLIC. Being a monopoly, the company had no need to understand the risk of both living toostrategic market plan. Advertising initiativeslong and dying too young. Further, in urbanwere limited to the print and electronic media, India and amongst the salaried class, insurancewhich mainly promoted LICs products as is largely used as a tax saving tool, rather thanbeing tax saving tools for salaried individuals.for protection against risk. There is need toAlthough the level of penetration has increased reorient the consumer about the benefits of lifeafter the entry of other players, it is still low insurance for both financial protection as wellcompared to other countries.as for long-term wealth creation. According to consumer feedback, the The impor tance of insurance isproblem has been exacerbated due to:unquestionable in modern economies as it agents inability to clearly explain theserves a broad public interest and is vital to features of the products;individuals security. Advocacy of insurance and lengthy documents that are not user risk issues is an important tool that friendly; andcomplements the insurance regulatory and the perception that agents are only supervisory framework. This is particularly so concerned with their commissions.given: (i) households growing risk exposuresand responsibility for covering them; (ii)1.8 Why Awareness is Importantincreasing diversity and complexity ofThe growing need for financial education forinsurance products; and (iii) heterogeneity ofthe families to take better financial decision andinsurance providers and distribution channels.to increase their economic security has been Advocacy can typically: (i) heightenwidely recognized. It is felt that well informedindividuals awareness and responsibilityand well educated customers can createtowards potential risks; (ii) enhanceeconomic ripples. They make better financialunderstanding of insurance mechanisms that6 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 23. can cover these risks; and (iii) enable theinsurance sector; (b) improving policy holderdevelopment of consumers knowledge andprotection; (c) setting up a dispute resolutioncapacity in order to make informed decisions asmechanism; and (d) regulating theregards insurance matters (OECD, 2006).intermediaries. Private insurers have introduced manyThe National Council of Appliedinnovative products and offer incentives onEconomic Research (NCAER), New Delhi haspolicies in order to woo consumers.The marketbeen contracted by IRDA, Hyderabad as theshare of private insurers has increased steadily consultant organisation to conduct nation-on the basis of total premium from 14.25 per wide pre-launch and post-launch surveys ofcent in 200506 to 29.90 per cent in 200910.insurance awareness. The NCAER conducted In todays context, though the customer the pre-launch survey during MarchAugust,has a variety of products to choose from, wise 2010.choices are possible only with requisiteWith the primary purpose of collectingawareness. Besides, it is not enough for the data on awareness of insurance throughout thecustomer to have knowledge only of the various country, the objectives of the survey werepolicies available. It is possible that a customer threefold:has problems with a particular policy and(a) To study and analyse awareness levels ofshould ideally be aware of organisations thatthe insured population regarding theirlook into grievances and make prompt payment rights under the Act, policy holderof claims. The customer must also be informedprotection regulations, different types ofabout the lapse of policies, revival of policies,insurance (life insurance including term,and the value of a policy in case of surrender.single, premium, endowment, ULIPs,Hence, the customer must not only choose a health insurance, general insuranceproduct which is suitable, but also engage withincluding householders, burglary, etc.), anda company in which the agents provide correctlevels of protection available from variousinformation. types of insurance. The results of the Max New York (b) To study and analyse the awareness levelsLifeNCAER Survey on India Financial of the uninsured regarding need forProtection (NCAER, 2008) indicates thatinsurance, types of insurance available,awareness of life insurance stands at a high ofinsurance interest, benefits of insurance,78 per cent on an all-India level with moreand benefits of ULIP investment.urban households (90%) aware of it than rural(c) To generate a socio-economic profile of thehouseholds (73%). The level of awareness has insured and uninsured population byincreased with education, age and income socio-economic parameters such aslevels. However, ownership of insurancehousehold income, type of dwelling unit,products was low at only 24 per cent. Further, ittype of ration card held, occupation,was the salaried class that tended to buyliteracy levels, etc.insurance the most, followed by businessmen.The information generated through theAlso, as compared to others married people are household survey on different facets of themore likely to buy insurance.insurance industry is presented in this report Realising the importance of enhancing the which is divided into seven chapters, beginningawareness regarding various aspects of with the introduction in Chapter 1. In Chapterinsurance, the IRDA has launched an2, the sample design and researchawareness campaign with the objectives of: (a) methodology are described. In Chapter 3,developing and promoting efficiency of the based on the data collected through the survey,PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN7 24. an attempt is made to compare the socio- diverse aspects of insurance, including theireconomic characteristics of the insured andrights and duties as policy holders.The views ofuninsured households. Chapter 4 deals with the uninsured households about insurance alsoperception of the sample population aboutforms a part of this chapter. In the last chapter,insurance as a concept and its benefits. Chapter broad conclusions are drawn based on the5 presents a detailed analysis of the level of survey results, and recommendations made forawareness of the sample population on thepolicy consideration.8 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 25. Methodology2.1 CoverageA primary survey of households wasundertaken in 29 major states and union union territory, a quarter of all districts, totalling 151 overall, were selected. The sample was drawn after consultation with IRDA. The 2territories, covering both rural and urban areas,selection criterion was the female literacy ratein Andhra Pradesh, Arunachal Pradesh,as it is considered to be a proxy for mediaAssam, Bihar, Chandigarh, Chhattisgarh,penetration.Daman & Diu, Delhi, Goa, Gujarat, Haryana, Stage 2. Selection of villages: Five sampleHimachal Pradesh, Jharkhand, Karnataka,villages were selected randomly from eachKerala, Madhya Pradesh, Maharashtra, district by the Simple Random SamplingMeghalaya, Mizoram, Orissa, Pondicherry, Without Replacement (SRSWOR) method.Punjab, Rajasthan, Sikkim, Tamil Nadu, Prior to applying SRSWOR, all the villages of aTripura, Uttarakhand, Uttar Pradesh, and Westdistrict were divided into three categoriesBengal. The remaining states and union according to the female literacy rate as follows:territories, accounting for approximately 34 high literacy (female literacy rate greaterper cent of the countrys population, were leftthan 70%);out due to operational difficulties. medium literacy (female literacy rate between 5070%); and2.2 Sample Design low literacy (female literacy rate betweenA three-stage stratified sample design has been3050%).adopted for the sur vey to generateTwo villages each were selected from therepresentative samples. Sample districts,high and low literacy categories, while onevillages and households formed the first,village was selected from the medium category.second and third stage sample units respectively Stage 3. Selection of households: In eachfor selection of the rural sample, while cities andselected village, approximately 100 householdstowns, urban wards and households were the were chosen by the equal probability samplingthree stages of selection for the urban sample.approach for the purposes of listing and Sampling was done independently withinpreliminary survey. During the preliminaryeach state and union territory and estimates survey, the listed households were stratified by:were generated at the state and union territory(i) insured and non-insured categories; (ii) landlevel. All-India estimates were made through possessed; and (iii) principal source of income.aggregation of the estimates for all states andThe 100 households to be stratified wereunion territories. divided into two categories, namely: (a) insured, where at least one member of the2.3 Selection of the Rural Samplehousehold possesses a life insurance policy; andStage 1. Selection of districts: From each state and (b) uninsured, where no member of thePRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 9 26. household possesses a life insurance policy. treated as strata. In each National SampleThe insured households were placed in Survey (NSS) region, towns were categorised eight strata while the uninsured household into five groups based on their population, category remained as a single stratum. Thus, all namely big towns and small towns. There are 100 households were placed across nine strata170 cities in which the population exceeds two as shown in Table 2.1. lakh. All the cities were selected with theTable 2.1: Stratification of Households in Rural AreasCategoryStratum Description1 Principal source of income is self-employment in agriculture and land possessed is 0 2 acres2 Principal source of income is self-employment in agriculture and land possessed is 210 acres3 Principal source of income is self-employment in agriculture and land possessed is more than 10 acres4 Principal source of income is through labour (agricultural or other casual labour)Insured 5 Principal source of income is self-employment in non-agricultural occupations and land possessed is02 acres6 Principal source of income is self-employment in non-agricultural occupations and land possessed isapproximately two acres7 Principal source of income is through regular salary or wages and other sources and land possessed is02 acres8 Principal source of income is regular salary or wages and other sources and land possessed is morethan two acresUninsured 9 No member of the household possesses a life insurance policyFrom each of the eight strata of insuredprobability of 1. The remaining cities and households, two households each were selectedtowns were grouped into four strata on the basis by the equal probability sampling approach. If of their population size and from each stratum a any household stratum was missing, thensample of town was selected independently. households from the previous sample stratum,A progressively increasing sampling where additional households were available,fraction with increasing town population was were selected so as to attain 16 sampled used for determining the number of towns to be households in that selected village. On theselected from each stratum. From each NSS other hand, four households were selected from region, the allocated number of small towns the ninth stratum. On the basis of this sampling was selected by following the equal probability design in rural areas, the realised sample ofsampling procedure. The sampling fraction as 14,560 households out of the preliminary listedshown in Table 2.2 was used at the state level. sample of 72,800 households was spread over A total sample size of 767 urban wards was 728 villages in 151 districts covering the 29allocated among the selected small and big states and union territories.towns in proportion to the number of wards inthe respective towns. The allocated number of 2.4 Selection of the Urban Samplewards selected from each sample town was According to the census of 2001, there are arrived at by following the equal probability approximately 4,850 cities and towns in thesampling approach. Thus, towns and wards states and union territories (excluding Jammufrom the first and second stage sample unit in & Kashmir). The population of cities and the urban sample design were selected. towns in India varies from less than 5,000 to As in the rural sample design, within a over one crore each. selected ward, a sample of approximately 100In the urban sample design, within the 29 households was selected for listing and covered state/union territories, states arepreliminary survey, using the equal probability10 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 27. Table 2.2: Sampling Fraction for City and Town GroupTown ClassTown population ( 000) Total towns Sample towns Sampling fractionI > 10000 3 3 1.00II5000100003 3 1.00 III10005000 29 29 1.00 IV5001000 37 37 1.00V 200500 98 98 1.00 VI 100200219 56 0.26 VII50100 396 44 0.11 VIII2050 113528 0.02 IX < 20 227044 0.02TotalAll4,1903420.08sampling approach. In the preliminary survey, random with equal probability of selection. Ifat the time of listing of the sampled households, there was no household in any particularinformation on insured or uninsured stratum, the shortfall was compensated fromhouseholds, size, household consumption the previous stratum, where additionalexpenditure for the last month (MPCE), andhouseholds were available, so as to obtain 14principal source of income were collected. Thesampled households from each selected ward in100 households were divided into the insuredthe urban sector of the detailed survey. For theand un-insured categories. The insuredun-insured household category, six householdshouseholds were placed across seven stratawere selected from the 8th stratum.while the uninsured household category By using this sampling design in urbanremains as a single stratum.Thereby, all the 100areas, the realised sample of 15,640 households,households have been placed in eight strata asout of the preliminary listed sample of 76,700shown in Table 2.3. households, was spread over 339 urban wards in Table 2.3: Stratification of Households in Urban Areas Category Stratum Description 1Principal source of income is regular salary, wage earnings and sources like remittances and pensionsand MPCE of Rs 800 or less2 Principal source of income as in stratum 1, but MPCE between Rs 801 and Rs 2,5003 Principal source of income same as stratum 1, but MPCE approximately Rs 2,500 Insured4 Principal source of income is self-employment and MPCE less than Rs 8005 Principal source of income is self-employment and MPCE between Rs 801 and Rs 2,500 6Principal source of income is self-employment and MPCE approximately Rs 2,500 7Principal source of income is through casual labour (agricultural and non-agricultural) Uninsured8 No member of the household possesses a life insurance policyFor the insured households category, two146 towns covering the 29 states and unionhouseholds were selected from each stratum at territories. PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 11 28. Socio-EconomicCharacteristics of Insured andUninsured Households One of the main objectives of the study isto generate a socio-economic profile of theinsured and uninsured households, and toThe occupation which forms the major sourceof income for the family has been taken as theoccupation of the household. Similarly, the 3examine whether any of the socio-economic highest level of education of any member in theparameters bear a direct impact on the purchase household has been taken as its level ofof insurance by them. Based on the data education. This was done because, even wheregenerated by the study (specifically Parts I andthe head of the family is not literate, theII pertaining to education, occupation, and younger members might be well educated and,income), the socio-economic characteristics ofbeing aware of insurance, become responsibleboth the insured and uninsured households for the household becoming insured.have been examined and the findings and It can be seen from Table 3.1 that a highconclusions analysed. For the purpose of thepercentage of the insured households are: (i)study, the criterion for any household beingself-employed to the extent of approximatelyconsidered insured is that at least one member52 per cent, comprising 9.67 per cent inof the household must have life insurance.agriculture and 32.28 per cent in non-agricultural work; (ii) salaried, comprising 343.1 Occupation and Educationper cent; and (iii) engaged as labour, comprisingThe distribution of households by occupationless than 13 per cent.and level of education is shown in Table 3.1. As regards uninsured households, the Table 3.1 Distribution of Households by Main Occupation and Level of EducationInsured HouseholdsUninsured Households OccupationRuralUrbanTotalRuralUrbanTotal Self-employed in agriculture36.28 2.3819.6734.98 3.4616.20 Agricultural labour3.56 0.522.07 11.09 1.17 5.18 Casual labour9.5213.6911.5628.3436.2133.03 Self-employed in non-agriculture24.6440.2332.2813.1332.7324.81 Regular wages and salaried25.6342.6033.9411.5925.6919.99 Others 0.36 0.600.48 0.870.73 0.79 Highest level of education Illiterate 1.41 0.470.95 4.202.07 2.93 Up to primary school 7.87 4.586.26 16.1011.7513.51 Up to secondary school33.6625.6229.7241.2137.6339.08 Higher secondary school and above 57.0669.3363.0738.4948.5444.48 Total Number of Households1130110866221673237 4774 8011 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 13 29. position is: (i) approximately 38 per cent belong as between the insured (43 per cent salaried and to the labour force, comprising five per cent in14 per cent labour) and uninsured (18 per cent agricultural labour and 33 per cent in casual salaried and 42 per cent labour) in the eastern labour; (ii) approximately 41 per cent are self-region. employed, comprising 16.2 per cent in As regards the highest level of education of agriculture and 24.81 per cent in non-households, nearly two-thirds of those insured agricultural work; and (iii) only one-fifth are are educated at least up to higher secondary salaried or earn regular wages. school, but much lower for the uninsured atThe irregularity in the earnings ofapproximately 45 per cent. On the other hand, uninsured households could be a major illiterate households account for approximately impediment in their opting for insurance, as it one per cent of the insured group, but three per involves regular payment. However, a slightly cent of the uninsured group. higher percentage of urban uninsuredThese observations suggest that education households (3.46%) are self-employed in does influence the households decision to opt agriculture, as compared with insured urban for insurance. Within insured households, the households (2.38%). Nevertheless, in both proportion of illiterate households is slightly insured and uninsured households, a higherhigher and those educated up to higher proportion in the rural category is self- secondary school or above slightly lower among employed in agriculture or works as agriculturalthe rural households as compared with the labour, as opposed to urban households where aurban households. This implies that urban higher proportion works as casual labour, ishouseholds are better educated. self-employed in non-agricultural work, or is Tables S3.1 (d), S3.1 (e) and S3.1 (f ) in the salaried. Annexure show the state-wise distribution ofTables S3.1(a), S 3.1(b) and S 3.1(c) givenhouseholds by level of education of household. in Annexure, show the state-wise distribution Among the rural insured, 95.45 per cent of the of households by main occupation of the households in Mizoram come under the household. While the distribution follows the highest education level, while the highest pattern applicable to India as a whole, there are proportion of illiterates is seen in Rajasthan. some differences, such as: (i) in Chandigarh, Among the urban insured, Meghalaya has the Delhi, Daman and Diu, Goa and Andhrahighest proportion of households under the Pradesh, the proportion of households highest education level (94.52%), while once receiving salaries and regular wages is higher in again Rajasthan has the highest percentage of the uninsured urban households as comparedilliterates (11.72%). with insured urban households; (ii) among the Among rural households, the southern rural insured households surveyed, in Sikkimregion has the largest proportion of more than 95 per cent were salaried or hadhouseholds in the highest education category regular wages, while the uninsured once again at 65 per cent in the insured and 50 per cent in had the highest proportion of households that the uninsured households. The proportion of were self-employed in agriculture; (iii) amongilliterates is highest in the northern region insured urban households, Mizoram has the (2%) amongst both insured and uninsured highest proportion of salaried households at(6%) households. approximately 95 per cent; (iv)among uninsured urban households, three-fourths in3.2 Type of Dwelling Unit and Family Orissa depend on casual labour; and (v) for A classification of households by ownership of urban households, there is a large difference inland, type of dwelling unit, and other the proportion of salaried and labour categoriesparameters is shown in Table 3.2.14 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 30. Table 3.2: Distribution of Households by Ownership of Land, Dwelling Unit, Type of Dwelling Unit, Type of Family and Availability of Electricity Connection (Percentage) Insured Uninsured All (Insured +Uninsured) RuralUrbanTotal RuralUrbanTotalRural UrbanTotal Ownership of land Percentage owning agricultural land 75.46 NA75.46 62.93NA 62.9373.05 NA 73.05 Average size of land (acres) 3.94 NA3.942.82 NA 2.823.71 NA3.71 Ownership of dwelling unit Own 94.7482.9088.94 92.89 79.45 84.8794.3381.85 87.86 Rented 4.7816.0710.31 6.1119.51 14.10 5.0717.12 11.32 Others 0.48 1.030.750.991.051.030.591.040.82 Type of dwelling unit Pucca 54.2675.5764.71 33.28 56.47 47.1049.5869.75 60.03 Semi-pucca33.0019.9226.58 41.20 31.92 35.6734.8223.58 29.00 Kutcha12.75 4.518.7125.52 11.61 17.2315.596.6710.97 Percentage of households with electricity 88.5996.6492.54 79.89 91.10 86.5786.6594.95 90.95 Type of family Nuclear 72.6475.8474.21 78.85 81.34 80.3474.0277.52 75.83 Joint 27.3624.1625.79 21.15 18.66 19.6625.9822.48 24.17 Number of households owning Agricultural land 8528NA85282,037NA 2,03710,620NA 10,620 Total Number of Households113011086622167 323747748011 1453815640 30178 NA=Not applicable It is evident from Table 3.2 that a uninsured households. The living conditions ofcomparatively higher percentage of insured insured households appear to be better thanhouseholds (approximately 75%) own those of the uninsured.agricultural land in comparison with uninsuredThe general perception is that peoplehouseholds (approximately 63%), and theliving in joint families are emotionally andaverage land holding is also higher for insuredfinancially more secure, and so it makes morehouseholds at 3.95 acres, against 2.82 acres for sense for people living in nuclear families touninsured households.have insurance, particularly life insurance. Similarly, comparison of house ownershipHowever, the data from the sampledreveals that approximately 89 per cent ofpopulation tells a different story. It can be seeninsured households live in their own houses, that a higher proportion of uninsuredwhile this is slightly lower for uninsured households consist of nuclear families ashouseholds at 85 per cent. Among the insured,compared with insured households, and thisthe proportion of households owning aholds true for both rural and urban categories.dwelling unit is higher in rural areas (94.74%) Tables S3.2(a), S3.2(b) and S3.2(c) provideas compared with urban areas (82.9%).the state-wise distribution of households Households living in pucca houses account according to the above criterion. Thus, amongfor 60 per cent of the insured category, but onlyrural households, while there is no difference in47 per cent of those uninsured. Additionally,the proportion of insured and uninsured withelectricity supply is present in 93 per cent ofelectricity connections in the southern regioninsured households, but only in 87 per cent of and a marginal difference in the western region, PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 15 31. a higher proportion of insured households inThe percentage of insured households the northern (84%) and eastern (85%) regions possessing any card (approximately 60%) is have electricity connections compared with much higher than that of uninsured households uninsured households (73 per cent and 75 per (45%) in the sur veyed population. cent respectively). The position is similar with Consequently, a higher proportion of respect to urban households, although a higher uninsured households possess Below Poverty proportion of these have the facility as Line (BPL) cards. Interestingly, one-fourth of compared with rural households, irrespective ofinsured households are BPL card holders, two whether they are insured or not. per cent are Antyodaya card holders and 0.22 Three-fourths of the households in rural per cent are beneficiaries under the Annapurna Chandigarh own a house irrespective of scheme. It is possible that the beneficiaries of whether they are insured or not. However, in the Antyodaya and Annapurna schemes are urban Chandigarh, while 63.3 per cent of the members of micro-insurance schemes. Tables uninsured own a house, the proportion is S3.3(a), S3.3(b) and S3.3(c) show the state- higher among the insured at 70 per cent. wise distribution of households based on the Among insured households, the proportion kind of ration card held. owning houses is lowest in Arunachal PradeshIn all regions, the proportion of Above (53.35 per cent in urban and 72.60 per cent in Poverty Line (APL) card holders is higher rural areas).among the insured compared with the In the eastern region, there is a huge uninsured, and is the highest in the western disparity in the proportion of insured (49%) region and the lowest in the southern region. and uninsured (19%) households living in Among the insured, rural Uttarakhand (7%) pucca houses in the rural as well as urban areas and rural Jharkhand (6%) and urban Assam (67 per cent insured and 32 per cent uninsured). (4%) have a higher proportion of Annapurna It is also seen that approximately 90 per cent ofcard holders compared with the other states. households in the southern region live inThis proportion is much higher among the nuclear families irrespective of being insured oruninsured in rural (13%) and urban (8%) uninsured, and whether in rural or urban areas.Himachal Pradesh, rural Uttarakhand (17%), In the remaining three regions, the proportion rural Mizoram (14%). living in nuclear families is slightly higher There are signific ant state-wise among uninsured households.differences. As high as 90 per cent of thehouseholds in Meghalaya reported holding no 3.3 Type of Ration Cardcard, while in Pondicherry 94 per cent of all The households are categorised by the type ofhouseholds have BPL cards. On the other ration card they possess in Table 3.3. hand, in Mizoram, nearly all urban households,Table 3.3: Distribution of Households by Type of Ration Card (Percentage)InsuredUninsured All (Insured + Uninsured)Type of Ration CardRural UrbanTotalRuralUrban TotalRuralUrbanTotalAPL 57.11 61.08 59.0540.17 48.8045.3153.33 57.3355.40BPL29.0721.68 25.4540.04 31.0334.6831.51 24.54 27.90Antyodaya 2.48 1.051.78 5.531.93 3.39 3.161.322.21Annapurna 0.22 0.210.22 0.400.36 0.38 0.260.260.26No card 11.12 15.98 13.5013.85 17.8816.2511.73 16.56 14.23Total100.00 100.00100.00100.00100.00 100.00 100.00 100.00100.0016 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 32. insured or uninsured, have APL cards, while inthe average household income of urbanthe rural areas 95 per cent of insuredhouseholds (Rs 1,08,405) being higher thanhouseholds have APL cards compared with 78that of rural households (Rs 88,640). Theper cent among the uninsured. difference in income of rural and urbanhouseholds is evident among both insured and3.4 Economic Status of theuninsured categories.Households It is also seen that the average income ofOn the basis of average annual per capita insured households (Rs 1,10,128) is muchincome, the households are divided into fourhigher than that of uninsured households (Rsincome classes: (i) households with less than 67,799). This is due to the fact that nearly 38Rs 10,000; (ii) between Rs 10,00016,000; (iii) per cent of uninsured households are in thebetween Rs 16,00027,000; and (iv) above Rs lowest income class as against only 22 per cent27,000. The average annual household income,of insured households, and while only 13 perconsumption expenditure and savings are cent of uninsured households are in the highestshown in Table 3.4. income class, this proportion is far higher forOn the whole, it is seen that approximately insured households (29%). As expected, theTable 3.4: Distribution of Households by Economic Status: Income, Expenditure and Savings Insured Households Uninsured Households All Households Income Class (average annual per capita) Rural Urban Total Rural Urban TotalRural Urban Total Up to Rs 10,00027.01 16.5321.8746.71 31.23 37.4831.3921.0126.02 Rs 10,001 to Rs 16,000 24.98 23.2324.12 25.7327.60 26.8525.14 24.57 24.84 Rs 16,001 to Rs 27, 00025.56 24.2124.9017.79 25.19 22.2023.83 24.5124.18 Rs 27,001 & above22.45 36.0429.11 9.77 15.9713.47 19.6329.9124.96 Average annual household income (Rs) 97,183 1,23,594 1,10,128 58,89773,834 67,799 88,660 1,08,405 1,04,770 Average annual household savings (Rs)23,11827,94725,484 12,138 14,60613,638 21,11024,41023,327 Average monthly household consumption expenditure (Rs) 6,162 6,9926,569 3,8234,6534,318 5,641 6,2785,971 Total number of households11,30110,866 22,167 3,2374,7748,01114,53815,64030,178one-fourth of the households come under eachaverage annual consumption expenditure ofclass of income considered. However, while 31 uninsured households (Rs 51,816) is less thanper cent of rural households have an averagethat of insured households (Rs 78,828), andannual per capita income of less than Rsthis also holds for average savings which stand10,000, only approximately 20 per cent fall inat Rs 13,638 for uninsured households asthe highest income category. On the other against Rs 25,484 for insured households. Thehand, among urban households, 21 per cent fallsources of information for the households arein the lowest income category and 30 per cent shown in Table 3.5.in the highest income class This is reflected in PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 17 33. 3.5 Major Sources of InformationTable 3.5: Distribution of Households by Major Sources of Information (Percentage)Source of InformationInsuredUninsured RuralUrban TotalRuralUrbanTotalRadio or transistor21.0614.04 17.6223.73 15.79 19.00Television 63.0280.10 71.3945.13 65.92 57.52Newspapers 32.4846.88 39.5425.92 34.75 31.18Magazines 3.06 5.334.171.542.932.37Internet1.14 3.182.140.491.511.10Bazaar or local people 32.0425.29 28.7334.32 32.47 33.22Relatives, friends or neighbours 47.4541.51 44.5351.53 46.56 48.57Panchayat13.03 1.44 7.35 13.35 2.226.72Fair price shop (FPS) 1.87 1.21 1.54 1.881.781.82Banners/hoardings 8.5312.33 10.397.2610.37 9.11Rural knowledge hub 2.82 0.651.762.840.521.46Others1.73 2.36 2.04 1.671.301.45None0.34 0.06 0.20 0.800.570.66Note: These are multiple responses and therefore the sum may not be equal to hundred Television is the primary source of3.6 Types of Insurance Held information for both insured and uninsuredThe distribution of households by type of households, followed by friends, relatives, andinsurance held is shown in Table 3.6. As per the neighbours who exchange news. Other majordefinition of the insured households adopted sources of information are newspapers, radiosfor the study, the table reflects 100 per cent life and transistors. The state-level picturesinsurance for the insured households and no on major sources of information are shownhousehold among the uninsured has life in Annexure Tables S3.4(a), S3.4(b) andinsurance cover for any of the family members. S3.4(c).Table 3.6: Distribution of Households by Type of Insurance TakenType of InsuranceInsured (%) Uninsured (%) RuralUrbanAll RuralUrban AllNo insurance- - -88.01 89.11 88.67Life insurance 100.00 100.00 100.00- - 0.00General insurance 2.89 4.82 3.84 0.620.650.64Health insurance5.27 6.59 5.92 0.560.440.49Motor insurance 26.41 35.56 30.905.166.796.13Tractor insurance 2.53 0.871.710.460.170.29Livestock insurance 0.33 0.32 0.32 0.190.080.12Accident insurance1.81 1.521.660.400.250.31Crop insurance2.49 0.291.410.620.100.31Pump insurance0.06 0.01 0.04 0.460.270.35Any other insurance 0.42 0.76 0.59 0.710.190.40Note: These are multiple responses and therefore the sum may not be equal to hundred18 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 34. It is noteworthy that even amongNadu (rural as well as urban) has the highestuninsured households (those without a lifeproportion of households with healthinsurance policy), some have opted for otherinsurance; (iii) 21 per cent of the households inkinds of insurance while the proportion ofrural Haryana, 25 per cent in urban Haryanauninsured households opting for insurance isand 44 per cent in urban Mizoram have generalmuch lower than insured households. insurance; and (iv) it is motor insurance whichThere are other pointers: (i) motor is very popular even among insured households,insurance is the most sought after, accountingPondicherry having the highest proportion offor nearly 31 per cent of insured and 6 per centhouseholds with motor insurance (89 per centof uninsured households; 35.56 per cent ofurban and 79 per cent rural).urban insured households and 26.41 per centof their rural counterparts have motor3.7 Details of Different Kinds ofinsurance; (ii) approximately 6 per cent of PoliciesLife, General and Healthinsured households have health insurance whileHeld by Members of Householdsthose who have general insurance is lower atThe survey collected detailed informationapproximately 4 per cent; (iii) as expected, aabout the insurance policies held by differenthigher proportion of rural households havemembers of the households like whether theytaken crop insurance and tractor insurancehave taken the insurance cover fromwhen compared with urban households; andgovernment or private companies, the amount(iv) the proportion of urban insured households of annual premium paid, amount insured, etc.who have taken health insurance and general These are analysed in this section. All theinsurance is marginally higher as comparedsurveyed households have been included in thiswith insured rural households.analysis. Hence while the proportion under lifeTables S 3.5(a), S3.5 (b), S 3.5 (c) and S3.5 insurance will include only members from(d) provide the state-wise distribution ofinsured households, those under the other twohouseholds based on the different kinds ofcategories of insurance could belong to eitherinsurance taken by them, with the broad picture insured or uninsured households.being: (i) motor insurance is the main type ofinsurance that the uninsured opt for; (ii) theProportion of Policy Holdersstates with a high proportion of householdsTables 3.7a (Rural), 3.7b (Urban) and 3.7copting for motor insurance are rural Punjab (All) provide information about the proportion(28%), Daman and Diu (rural 30%, urbanof household members having life insurance,23%), Goa (rural 25%, urban 40%) andgeneral insurance and health insurance underPondicherr y (ur ban 33%); and (iii)both public and private sectors, based on theirChhattisgarh (urban) has the highestincome categories. Since more than one personproportion of households opting for healthfrom the same household can opt for insurance,insurance among the uninsured. It is, however,the tables show the number of members andpossible that the households are members of not the number of households.some micro-insurance or health insurance The data shows: (i) the number ofscheme offered by a particular employer.household members, rural or urban, opting forFurther features here are: (i) amonginsurance clearly indicates that those takinginsured households, those in the southern government insurance policies far exceed thoseregion have the highest proportion opting for taking private insurance policies, regardless ofdifferent types of insurance, and these the type of insurance, namely life, general orpercentages are higher for the urban category health; and (ii) those opting for general andcompared with the rural category; (ii) Tamilhealth insurance are almost negligible when PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 19 35. Table 3.7a: Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories (Rural)(Percentage)Household IncomeLifeLife GeneralGeneral HealthHealthClass (average annual Insurance InsuranceInsuranceInsurance Insurance Insuranceper capita income inGovernmentPrivateGovernment Private GovernmentPrivateRs)Less than Rs 10,000 19.0323.3425.0018.525.41 11.76Rs 10,000 to Rs 16,000 26.88 29.2926.9218.52 40.5429.41Rs 16,001 to Rs 27,00027.3624.3321.1537.04 27.03 11.76Above Rs 27,000 26.7323.0426.9225.93 27.0347.06Number of Household13,0571,007 52 27 37 17members InsuredTable 3.7b: Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories(Urban) (Percentage)Household IncomeLifeLife GeneralGeneralHealthHealthClass (average annual Insurance InsuranceInsuranceInsuranceInsurance Insuranceper capita income)GovernmentPrivateGovernment PrivateGovernmentPrivateLess than Rs10,000 10.37 10.40 7.1413.64 0.00 14.29Rs 10,000 to Rs 16,000 23.43 20.15 21.43 18.18 34.4821.43Rs 16,001 to Rs 27,000 23.98 23.40 17.86 18.18 6.9042.86Above Rs 27,000 42.2346.05 53.57 50.00 58.6221.43 ,Number of Household13 484 923 282229 14members insuredTable 3.7c: Distribution of Household Members with Insurance by Annual Per Capita Household Income Categories (Rural+ Urban) (Percentage)Household Income LifeLifeGeneral General HealthHealthClass (average annualInsurance Insurance Insurance Insurance Insurance Insuranceper capita income) GovernmentPrivate GovernmentPrivate GovernmentPrivateLess than Rs.10,000 14.63 17.15 18.75 16.333.03 12.90Rs 10,000 to Rs 16,00025.13 24.92 25.00 18.37 37.88 25.81Rs 16,001 to Rs 27,00025.64 23.89 20.00 28.5718.1825.81Above Rs 27 000 34.60 34.04 36.25 36.7340.9135.48 ,,,Number of Household 26 5411 930 804966 31members insured compared with those taking life insurance (97 government or private, does not appear to members with health insurance, 129 with depend on their income group; (ii) among general insurance as against 28,471 with life urban households, the proportion of their insurance). members taking insurance goes up with An examination of the proportion of increase in the level of income, for both household members in different income groupsgovernment and private insurance policy holding policies shows: (i) among rural holders; (iii) the proportion of policy holders is households, the proportion of members who the least (approximately 10%) in the lowest opt for different types of life insurance, either income categories, while 42 per cent of those20 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 36. with government life insurance policies, and 46 health insurance are males, the genderper cent of those with private life insurance difference in the number of policy holders ispolicies belong to the highest income group;less in the case of health insurance. The male-and (iv) for general and health insurance, no female ratio among those having healthparticular trend is seen, and it may also not beinsurance are 70:30 for government, and 67:33correct to interpret the data since the number of for private as compared to the malefemalemembers who have opted for these is very low. ratios among those having life insurance (80:20for government, and 79:21 for private). Also,Policy Holders by Genderwhatever be the type of insurance, theThe proportion of policy holders by gender is proportion of urban females insured is highershown in Table 3.8. than that of rural females. Table 3.8: Proportion of Policy Holders by Gender Category of insurance Rural Urban Rural + Urban MaleFemaleMaleFemaleMaleFemale Life insurancegovernment 82.3717.6377.33 22.67 79.8020.20 Life insuranceprivate81.07 18.93 76.56 23.44 78.9121.09 General insurancegovernment87.8812.1281.63 18.37 85.2214.78 General insuranceprivate 86.67 13.33 72.00 28.00 81.4318.57 Health insurancegovernment 76.09 23.91 64.44 35.56 70.3329.67 Health insuranceprivate70.5929.4165.52 34.48 67.3932.61Table 3.8 clearly indicates that amongValue of Policy and Premiuminsurance policy holders, the proportion of maleThe average annual premium and the averagemembers is much higher than that of females, forpolicy value for all three categories of insuranceall types of insurance irrespective of whether thebased on income class are given in Table 3.9.household is rural or urban. However, the ratio ofThus, both average annual premium paidfemale members having insurance is higher inby the policy holder and average annual value ofthe urban households in all categories. life insurance are generally seen to increase withGenerally, life insurance is considered to be the rise in household income. The policy value,a safety valve and protects the family against aand hence the premium, are higher for privatemishap that might afflict the earning memberlife insurance compared with government lifeof the family. Since the proportion of earninginsurance. While the average annual premiummales is much higher than that of earning for government policies range between Rsfemales, a similar difference would exist in the3,830 for the lowest income group to Rs 7,616proportion taking insurance. Similarly, most of for the highest income group, this rangesthose going in for general insurance are thosebetween Rs 6,257 and Rs 11,139 for privatewith vehicle insurance, and once again it is to beinsurance. Similarly, the value of the policyexpected that a higher proportion of insuredvaries between Rs 78,000 and Rs 1,31,000 inpersons would be males, as reflected in the case of government policies, and between Rstable.74,000 and Rs 1,42,000 in case of privateHealth insurance however is taken as apolicies. The general and health insuranceprecautionary measure.The table indicates thatpolicy numbers are very low.although a higher proportion of those having PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN21 37. Table 3.9: Average Annual Premium and Average Policy Value by Income Class Average Annual Premium (Rs)Average Policy Value (Rs)HouseholdsGovernment GovernmentGovernmentGovernment Government GovernmentIncome Class Insurance Insurance InsuranceInsurance InsuranceInsurance Insurance Insurance Insurance InsuranceInsuranceInsuranceGeneralGeneralGeneralGeneral Private Private Private Private PrivatePrivate HealthHealth Health Health(average annual LifeLife Life Lifeper capita income)Less than Rs 3,8306,257 7,565 4,261 1,2006,575 77,948 73,9351,26,786 38,31327,500 40,00010,000Rs 10,000 to 4,5625,762 7,905 1,267 5,709 6,848 87,610 1,20,059 86,625 20,87898,125 1,98,875Rs 16,000Rs 16,001 to 4,8278,368 6,645 5,746 1,5762,319 89,449 1,10,255 1,97,800 96,808 41,250 34,814Rs 27,000Above Rs . 7,000 2 7,61611,139 8,381 8,087 5,754 15,625 1,30,990 1,42,199 96,946 1,16,956 8,55,75 1,20,000Total number ofpersons26,541 1,9308049 6631 26,541 1,930 80 49 66 31 Annual Premium as Percentage ofof income, are higher for private life insurance Income compared with government life insurance The average annual premium as a percentage ofreckoned by income classes. But surprisingly, annual income for all three kinds of insurance this is: (i) the lowest for the highest income for rural, urban and all households together isgroup with 1.80 per cent for government and shown in Tables 3.10a, 3.10b and 3.10c.8.80 per cent for private insurance in ruralConfirming the results of the previoushouseholds and 3.69 per cent and 4.07 per cent Table, it is seen that the premia as a percentagerespectively for government and privateTable 3.10a: Average Annual Premium as a Percentage of Annual Household Income (Rural)Households Income LifeLifeGeneral GeneralHealthHealthClass (average annual Insurance Insurance Insurance InsuranceInsurance Insuranceper capita income)GovernmentPrivate GovernmentPrivateGovernmentPrivateLess than Rs 10,0008.67 14.7919.02 7.682.709.88Rs 10,000 to Rs 16,000 6.72 8.10 7.912.533.1413.35Rs 16,001 to Rs 27,000 4.89 9.50 8.045.161.483.91Above Rs 27,0001.80 8.08 7.133.382.8910.18Total number of persons 13,057 1,00752273717Table 3.10b: Average Annual Premium as a Percentage of Annual Household Income (Urban)Households Income LifeLifeGeneral GeneralHealthHealthClass (average annual Insurance Insurance Insurance InsuranceInsurance Insuranceper capita income)GovernmentPrivate GovernmentPrivateGovernmentPrivateLess than Rs 10,0008.09 11.693.65 12.140.0018.75Rs 10,000 to Rs 16,000 6.57 8.87 19.95 1.0016.06 4.40Rs 16,001 to Rs 27,000 5.20 7.86 4.518.082.481.92Above Rs 27,0003.69 4.07 1.544.262.742.17Total number of persons 13,484923 2822291422 PRE-LAUNCH SURVEY REPORT OF INSURANCE AWARENESS CAMPAIGN 38. Table 3.10c: Average Annual Premium as a Percentage of Annual Household Income (Total) Households Income Life LifeGeneral General Health Health Class (average annual InsuranceInsurance Insurance Insurance InsuranceInsurance per capita income)Government Private GovernmentPrivate Government Private Less than Rs 10,0008.45 13.8116.709.402.6514.51 Rs 10,000 to Rs 16,0006.658.40 11.521.858.329.98 Rs 16,001 to Rs 27, 0005.04 8.73 6.93 5.991.642.42 Above Rs 27,000 3.715.42 4.08 3.942.807.60 Total number of persons 26,5411,930 80 496631insurance in urban households; and (ii) the 1,706 and Rs 11,641 for rural households; (ii)highest for the lowest income group with 8.67 Rs 3,697 and Rs 8,267 for urban households;per cent for government and 14.79 per cent forand (iii) Rs 2,751 and Rs 7,989 for theprivate insurance in rural households and 8.09households taken together (rural and urban),per cent and 11.69 per cent for government andbeing similar to those paid by households withprivate insurance in urban households.government life insurance.3.8 Opinion of Uninsured3.9 ConclusionHouseholds on Possible Economic The analysis yields the following conclusions:Risks (i) a higher proportion of insured householdsThe uninsured households were asked if they have salaried, regular wage earners or are self-would contribute some money for possibleemployed; (ii) the proportion of labourers iseconomic risks. In the case of those whohigher among the uninsured; (iii) the averageanswered in the affirmative, the amount theyannual income, expenditure and savings ofcould contribute per year was noted. Table 3.11 insured households is much higher than that ofprovides the distribution of such householdsuninsured households; (iv) among both thebased on income categories. insured and the uninsure