Financial Inclusion through Insurance Sectors

According to the Planning Commission (2009), Financial inclusion refers to universal access to a wide range of financial services at a reasonable cost. These include not only banking products but also other financial services such as insurance and equity products. Access to affordable basic financial services (having a bank account, credit, deposit and insurance etc.,) is one of the key challenges facing the rural and semi-urban population in India. These basic financial services lead to being a normal social life in the society. The Government of India, Reserve Bank of India and policy makers have been taking proactive steps for improving these basic financial services particularly rural areas in India. But still large segment of population unable to access basic financial services because not aware of the financial services and lack of financial literacy are the major constraints for access these services this leads to financial exclusion. So far, banking industry in India show significant effects in enhancing financial inclusion but the focus is shifting towards inclusion of rural and semi-rural poor people in insurance. In financial inclusion, insurance sector is also one of the important determinants factor. In the current scenario 80 per cent of the population remains excluded in the life insurance category and 90 per cent out of non-life insurance segment. Thus, inclusion with insurance had got a long way to go in India. The present study focuses on the role of insurance sector for enhancing financial inclusion and present scenario of insurance sector in India. The study is based on secondary data, were collected from IRDA reports, Journals and magazines.