Insurance reforms set India on path to universal coverage by 2047: R Doraiswamy

India's financial landscape is undergoing significant transformation, and the insurance sector is at the forefront of this change. The proposed 'Sabka Bima Sabki Raksha' (Everyone's Insurance, Everyone's Protection) Bill, an amendment to the existing Insurance Act, represents a monumental step towards realizing the vision of universal insurance coverage by 2047, aligning with India's broader 'Amrit Kaal' development goals. This legislative effort is not merely a tweak but a structural overhaul, aiming to deepen insurance penetration and enhance financial security for all citizens.

The background to these reforms is rooted in India's historically low insurance penetration rates, which have lagged behind global averages despite a large population base. For decades, the insurance sector was largely state-controlled, with the nationalization of life insurance in 1956 (leading to the creation of LIC through the LIC Act, 1956) and general insurance in 1972 (via the General Insurance Business (Nationalisation) Act, 1972). While this provided stability, it also limited competition and innovation. The liberalization era, beginning with the IRDA Act, 1999, opened the doors for private players and established the Insurance Regulatory and Development Authority of India (IRDAI) as the primary regulator, injecting much-needed competition and product diversity. However, large swathes of the population, particularly in rural and semi-urban areas, remain uninsured or underinsured, highlighting the persistent need for more inclusive policies.

The 'Sabka Bima Sabki Raksha' Bill, therefore, seeks to address these gaps. Its primary objective is ambitious: to ensure that every Indian has access to adequate insurance coverage by the time India celebrates its centenary of independence in 2047. This includes critical amendments to the Life Insurance Corporation (LIC) Act, acknowledging LIC's pivotal role as the largest life insurer and a key player in achieving this universal coverage goal. A significant aspect of the Bill, as highlighted, is the omission of 'open architecture' for individual agents. This means that individual agents will likely continue to largely operate with a single insurer, rather than being able to sell products from multiple companies. This specific provision is seen as a substantial relief for LIC, which relies heavily on its vast and deeply entrenched agent network, particularly in reaching diverse demographics across the country. For LIC, maintaining the loyalty and singular focus of its agents is crucial for its market strategy and continued dominance.

Key stakeholders in this reform process include the Government of India, particularly the Ministry of Finance, which drives policy formulation; the IRDAI, responsible for regulatory oversight and implementation; and the insurance companies themselves – both public sector giants like LIC and the growing cohort of private insurers. Insurance agents, who are the frontline of distribution, are also critical stakeholders, as their operational framework and incentives are directly impacted. Most importantly, the millions of Indian citizens stand as the ultimate beneficiaries, gaining access to financial protection against life's uncertainties, be it health emergencies, loss of income, or other unforeseen events.

This initiative matters profoundly for India. Economically, increased insurance penetration leads to greater financial inclusion, reduces the burden of out-of-pocket expenses (especially in healthcare), and channels long-term savings into productive investments, thereby boosting capital formation. Socially, it creates a robust safety net, protecting vulnerable families from falling into poverty due to unforeseen crises, aligning with the 'Sabka Saath, Sabka Vikas, Sabka Vishwas' philosophy. Politically, it reinforces the government's commitment to social welfare and inclusive growth, forming a cornerstone of the 'developed India by 2047' vision. The constitutional backing for such legislative action is derived from the Seventh Schedule of the Constitution, where 'Insurance' falls under Entry 47 of the Union List, empowering the Parliament to legislate on this subject.

Historically, India has made strides in financial inclusion through schemes like the Pradhan Mantri Jan Dhan Yojana (PMJDY) for banking, and social security insurance schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). These reforms build upon that foundation, aiming for a more holistic and robust insurance ecosystem. The future implications are vast: while achieving universal coverage by 2047 presents significant challenges related to affordability, awareness, and distribution, the bill sets a clear policy direction. It will likely spur greater innovation in product design, leverage technology (InsurTech) for wider reach and efficiency, and necessitate continuous capacity building for agents. The competitive landscape between public and private insurers may evolve, but the overall growth of the sector is expected to accelerate, contributing significantly to India's economic resilience and social welfare in the coming decades.