Q. How have the reforms in the Insurance Sector provided Universal Social Security System especially to the underprivileged? Discuss.
Introduction
The
insurance sector plays a crucial role in a nation's economic and social
development by providing financial security and risk management solutions. Over
the years, reforms in the insurance industry have significantly contributed to
achieving a Universal Social Security System (USSS), particularly
benefiting the underprivileged. These reforms include policy changes, increased
government intervention, expansion of microinsurance, and digital
transformation to ensure greater accessibility and affordability.
1. Liberalization and Privatization
of the Insurance Sector
Earlier,
the insurance industry was dominated by public sector companies, limiting
competition and innovation. The entry of private players after liberalization
led to better products, increased efficiency, and more extensive outreach,
particularly in rural and semi-urban areas. This has enabled even marginalized
communities to access insurance coverage.
2. Government-Backed Social Security
Schemes
Several
schemes have been launched to provide affordable insurance to the economically
weaker sections:
- Pradhan Mantri Jan Dhan Yojana
(PMJDY): Facilitated financial
inclusion and brought millions into the formal banking system, linking
them to insurance and pension schemes.
- Pradhan Mantri Jeevan Jyoti
Bima Yojana (PMJJBY): Offers
low-cost life insurance to people aged 18-50, ensuring financial security
for families in case of untimely death.
- Pradhan Mantri Suraksha Bima
Yojana (PMSBY): Provides accidental insurance
to weaker sections at minimal premiums.
- Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY): The world's largest health insurance scheme, covering secondary and tertiary hospitalization costs for economically weaker sections.
3. Expansion of Microinsurance
Microinsurance
products have been designed to cater to the needs of low-income groups. These
include health, crop, livestock, and weather-based insurance schemes that
provide financial stability to farmers, laborers, and small businesses. Digital
platforms and mobile insurance have further eased access to such policies.
4. Technological Advancements and
Digital Inclusion
The
use of technology, such as Artificial Intelligence (AI), blockchain, and mobile
applications, has simplified policy issuance and claims processing. Digital
platforms, Aadhaar-based authentication, and mobile wallets have made it easier
for the underprivileged to enroll in and benefit from insurance schemes.
5. Regulatory Changes and Consumer
Protection
The
Insurance Regulatory and Development Authority of India (IRDAI) has
played a significant role in enhancing consumer protection through transparent
policies, simplified claim settlements, and grievance redressal mechanisms.
Mandating insurers to offer simple, standardized policies has encouraged more
people to opt for insurance.
Challenges and Way Forward
Despite
progress, challenges such as low awareness, affordability issues, and claim
settlement delays persist. The government and private sector must work together
to enhance awareness campaigns, subsidize premiums for the most vulnerable, and
use fintech solutions to improve penetration.
Conclusion
Insurance
sector reforms have significantly contributed to the creation of a Universal
Social Security System, ensuring financial inclusion and protection for the
underprivileged. With continued policy innovation, digital transformation, and
public-private collaboration, the vision of comprehensive social security for
all can be fully realized.
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