Pranab Mukherjee for more thrust on micro insurance products

Union finance minister Pranab Mukherjee today called for efforts to bring awareness among rural populace about micro and crop insurance products as a way to enhance insurance penetration in the country.

Mukherjee highlighted popularisation of micro insurance -- products characterised by low premium payments and low
coverage limits-- as an effective model to promote financial
inclusion.

"To provide a hedge against these unforeseen risks (like bad monsoon and other calamities), I would like popularisation of micro-insurance as one of the essential ingredients of financial inclusion packages," Mukherjee said at a function here.

Also, there is a need to make farmers aware about the importance of crop insurance as they are heavily dependent on monsoons, he said, adding that the government has taken a serious view about the huge gap between the amount of crop loans disbursed and that covered under the scheme.

Further, insurance companies should prepare to deal with any kind of catastrophic losses, given that India is a disaster-prone country, and explore the reinsurance market to mitigate the impact of heavy losses, he said. 

The insurance penetration in the country, which grew to 4.6% of GDP in 2009 from 1.84% in 1996, still remains low owing to factors such as lack of awareness and availability of products, he said.