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Optima is a thought leader in the Indian insurance industry. Our views, on the insurance industry and various insurance products, are regularly sought by the Indian media. Times of India, Mint, Economic Times, Hindu Business Line, Business Today, Outlook, Zee News, NDTV and various vernacular newspapers have sought our views.

Why home insurance schemes get lukewarm response in India

July 6, 2014

Although common insurers have been lobbying for benefits for property insurance underneath the Revenue Tax Act in the run up to the budget, the residence insurance coverage industry in India nonetheless continues to be hugely below-penetrated at much less than 2%. “A advantage for residence insurance coverage under the Income Tax Act would give fillip to the house insurance company just like wellness insurance with Segment 80 D,” Milind Kharat, chairman and managing director, United India Insurance coverage, mentioned.

Segment 80 D offers for deduction from the total taxable income for the payment (by any mode other than money) of medical insurance coverage premium paid by an person or HUF (Hindu undivided family members). This tax deduction is accessible above and over the deduction of Rs 1 lakh under Part 80 C. Even though standard insurance businesses have a house insurance coverage providing, insurers are rapid to point out that such covers only cover insured perils, i.e., losses due to terrorism and normal calamities like earthquake. This kind of covers would not come into force in the situation of man-made disasters, which contain substandard top quality of construction. Yet another purpose hampering the growth of the home insurance coverage enterprise are valuation troubles with many homeowners unwilling to quantify the variety and price tag of valuables at house.

In addition, there is a lack of push for such goods from insurance agents and distributors on account of the lower commissions attached to the solution. The policy dimension in residence insurance is calculated on the value of building of the residence. “When it comes to property insurance in India, the most thorough cover continues to be fire as that covers all damages due to normal leads to as properly as other social hazards this kind of as riots,” Rahul Aggarwal, chief executive officer, insurance coverage advisory, Optima Insurance Advisors, said.

Nevertheless, insurers are hunting to push home insurance coverage. Bajaj Allianz not too long ago launched an all-danger residence insurance cover that covers apartments on an agreed worth basis. Six distinct strategies are accessible below this policy along with 8 include on covers. Similarly, Tata AIG also has covers for fire and allied perils, covers for burglary and theft, a policy for breakdown of electronic items and an all-threat cover for jewellery and other transportable products. United India Insurance coverage too has a householder insurance coverage policy exactly where the constructing is covered for loss due to earthquake, fire and storm and contents in the household are covered for burglary.

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