The Last Mile: Rural Women In India Are Embracing Insurance, Know The Story Of Change

Jan Suraksha scheme was launched under the Pradhan Mantri Jan Dhan Yojana (PMJDY) nearly a decade ago. During this period there has been significant progress in extending insurance coverage to rural women under this scheme, according to a recent report by Women’s World Banking, an NGO working towards financial inclusion of women. As of April 2023, around 66.76 per cent of PMJDY accounts (no-frills bank accounts) are now enrolled for accidental insurance, 31 per cent for life insurance, and 10 per cent for micro-pensions. Compared to the traditionally low penetration rates of retail insurance options in rural India, this marks a notable development in the insurance sector.

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How Are Rural Women Embracing Insurance In India?

The study, based on interviews with 912 PMJDY women customers of a leading public sector bank across four states, namely, Jharkhand, West Bengal, Assam, and Tamil Nadu, finds that there has been widespread adoption of Pradhan Mantri Suraksha Bima Yojana (PMSBY, accident insurance policy) and Pradhan Mantri Jeevan Jyoti Yojana (PMJJY, life insurance policy) and other government insurance schemes among these women.

Most of them have a household income of less than Rs 1 lakh per year, with a significant 46 per cent earning less than Rs 25,000 annually.

The study reveals the extent to which rural women are embracing different insurance products:

PMSBY’s Popularity: Around 68 per cent of women, regardless of income or occupation, have purchased PMSBY. Its affordability (Rs 20 for coverage of Rs 1 lakh) makes it a popular choice.

Health Coverage: Though 30 per cent of women have enrolled in the PMJAY, a government health scheme aimed at low-income groups, its uptake remains moderate, the study shows.

Life Insurance Uptake: Around 62 per cent of respondents have opted for the PMJJBY which provides life insurance coverage, to ensure financial security for their families.

Is This Enough?

No, the study hints. Despite the progress made, the insurance coverage landscape for rural women is still fraught with challenges, such as:

Risk Exposure Remains High: While Jan Suraksha has been quite effective in providing social protection against accidents and death, rural women are still at extreme risk. Around 56 per cent have experienced income loss due to circumstances like property damage, climate shocks, or sudden health issues.

Low Claims and Coverage Gaps: Despite having the insurance not all women claim it in times of need. Among those who faced property loss, only 16 per cent had insurance, and merely 14 per cent of them made a claim. In health-related scenarios, 43 per cent reported having insurance, but only 7 per cent used it when needed highlighting significant under-utilisation of coverage.

Mis-selling Trouble: The study finds that around 38 per cent of women bought insurance from banking agent points. Another 35 per cent of women said that they learned about insurance from their banking agents when they visited their bank for another work. This usually happens at the back of a savings relationship or at the time of account opening.

Surprisingly, 15 per cent of the women surveyed were enrolled in an insurance product without prior knowledge, which points to instances of misselling.

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Why Insurance Is Evermore Crucial For Rural Women?

The significance of insurance for rural women cannot be overstated enough since many are at extreme risk of economic vulnerabilities such as:

Income Shocks: Around 56 per cent of rural women are exposed to various income socks, the data reveals such as health emergencies and climate-related events. When faced with such a crisis, 38 per cent rely on savings and bank payments, but for many these funds are inadequate.

Debt Dependency: As a result of insufficient savings, 42 per cent of women have to borrow money during the financial crisis. Although many have access to insurance, an alarming 2 per cent of these affected women use it for resilience-building, often because they lack the right policies or understanding of claim processes

How Can Government Make Insurance More Affordable For Rural Women?

Since trust towards government backed-schemes is relatively high in rural areas, even those

women who are not covered under any of the schemes, 78 per cent to be exact, claim to be interested in being enrolled.

The report suggests reducing taxes on microinsurance schemes which will help build a level playing field while enhancing competition and making last-mile markets more attractive for insurers. However, it is more important to build relevant micro-insurance products (especially

for health, parameterised business, and property coverages) that incorporate the local risks to which this women's customer base is vulnerable.