The government can further enhance insurance penetration in the country through compulsory enrolment of MGNREGA workers in PMJJBY and PMSBY, and rationalising the 18 percent GST on insurance policies, according to an SBI report.

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The report recommended that the insurance coverage can also be increased by plugging the protection gap through introduction of some standardised products for various sectors.

"Though MGNREGA has provided livelihood security, we propose compulsory enrolment of MGNREGA workers in PMJJBY and PMSBY for a payment of only Rs 342 (330+12), which can be bought by the government," SBI Ecowrap said.

As only 10 per cent of HHs (households)/individuals complete 100 days of work, the cost of compulsory enrolment is only Rs 400-500 crore which may be borne by the government, the report said.

The insurance penetration in India has increased from 2.71 percent in FY01 to 5.20 percent in FY09 due to liberalisation but thereafter the level of penetration declined and reached 3.30 per cent in FY14.

However, with significant government support and universal insurance schemes (PMJJBY, PMSBY), the insurance penetration has started increasing again from FY15 and is at 4.20 per cent in FY21, the report noted.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is available to people in the age group of 18 to 50 years for a premium of Rs 330 per annum. The life cover under the scheme is of Rs 2 lakh.

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is available to people in the age group 18 to 70 years. For an annual premium of Rs 12, the risk coverage under the scheme is Rs 2 lakh for accidental death and full disability and Rs 1 lakh for partial disability.

The mandate of the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.

The report further said at present all insurance policies are taxed at GST of 18 percent, and a reduction in premium will go a long way in building a secure nation where every household will have the ability to overcome financial stress caused by unforeseen events of life.

In India the insurance penetration is low and introduction of tax in the realm of insurance may not represent the best step forward.

"After COVID 19 pandemic effect on the economy, it seems this is right time to reduce the GST rate to 5 percent or 'Nil' rate on life/health/term insurance to cover maximum population of India," the report said.

In India, the overall protection gap in all the segments (both life & non-life) is about 70 to 80 per cent, which means only 20-30 percent have any type of insurance.

"To plug the protection gap quickly, in line with Jan Suraksha, the government should come out with some standardised products for various sectors so that the protection gap in each segment can be reduced significantly," the report suggested.

It said that the Indian insurance sector has shown resilience amid the COVID-19 pandemic with the dip in premiums milder and the recovery been faster.

During April-February, FY22, new business premium (NBP) of the life insurers increased by 8.4 per cent (year till date) to Rs 2.54 lakh crore.

The report further said that every one in three life insurance policies in the country are sold to a woman.

The number of policies issued to women in FY21 was around 93 lakh, which is a 33 percent share as against a share of 32.23 percent in 2019-20.