| dc.description.abstract | This study investigates the determinants influencing microinsurance investment in
Kerala, from the perspective of policyholders in the state, focusing on understanding
the factors shaping individuals' investment to engage with microinsurance products.
Microinsurance, a pivotal financial instrument catering to the risk management
needs of low-income individuals, holds significance in Kerala's socio-economic
landscape. Moreover, the study also highlights the potential contributions of
microinsurance business in the state of Kerala to the growth and development of the
Microinsurance sector of the Indian economy. Microinsurance policies sold by LIC
in Kerala during the 2019-20 financial year contributed less than 1% to the national
Microinsurance business in India.
Microinsurance is defined as “the protection of low-income people against specific
perils in exchange for regular premium payments proportionate to the likelihood and
cost of the risk involved”. The definition is the same as one might use for regular
insurance except that the target group is low-income people. Low-income people
live in unfavourable environments and are vulnerable to many perils like sickness,
accident, death and loss of property. They are more vulnerable to these risks than the
rest of the population. The emerging opportunity of Microinsurance not only
promotes business perspective but also social development and protection for poor
people. The rural and social sector obligations and Microinsurance regulations from
IRDA are important steps in the direction of ensuring financial inclusion and social
protection for the poor. The first Microinsurance Regulations came in 2005 which
was amended from time to time. The Insurance Regulatory and Development
Authority of India (IRDAI) notified the Microinsurance Regulations in July 2015
with a mission to drive the growth and development of the microinsurance market in
India. This regulatory framework aimed to make insurance accessible and affordable
for low-income individuals and underserved communities. However, market
penetration of Microinsurance is seen to be very low in India as well as Kerala.
There is a huge rural market but the protection gap is equally huge.
The research methodology relies on ‘Research Onion’, proposed by Saunders et al.
(2007), which is a conceptual framework that illustrates the various stages and
layers involved in conducting research. By using the Research Onion as a guide, the
researcher can systematically navigate through each layer, making informed
decisions at each stage of the research process, ensuring a comprehensive and well-
structured research design. Employing a mixed-method research approach, the study
amalgamates quantitative surveys and qualitative interviews to comprehensivelyexplore the investment determinants in microinsurance. Quantitative data collection
involved administering structured interview schedules to a diverse sample of
policyholders residing across various regions of Kerala. This quantitative phase
aimed to obtain statistical insights into the primary factors influencing policyholders'
choices regarding microinsurance investment. The qualitative segment encompassed
in-depth interviews with selected participants from life insurance Companies,
facilitating a deeper understanding of the nuanced perspectives and motivations
surrounding microinsurance investment.
Analysis of the data revealed pivotal determinants influencing microinsurance
investment in Kerala. The study identified key factors such as financial capability,
perceived value and benefits of microinsurance, perceived risk, attitude towards risk,
levels of awareness and understanding, informal strategies adopted to mitigate risk,
and demographic characteristics influencing policyholders' Microinsurance
investment. Furthermore, the study unveiled significant changes in socio-economic
status financial capability, Perceived value, and perceived benefits when they are
insured. Attitude towards risk had a positive and significant impact on
Microinsurance investment decisions whereas Perceived risk was found to have a
significant negative impact on Microinsurance investment decisions. Similarly,
informal strategies adopted by policyholders have a negative relation to
Microinsurance policyholders. Among the determinants financial capability was a
major factor influencing policyholders’ investment. More than fifteen years of data
were collected from the IRDA report, which provided an accurate picture of Kerala's
and India's life microinsurance markets. In the past few years, there hasn't been any
significant growth in new business. Kerala's microinsurance market share within
LIC of India has remained below 1% in recent years. The microinsurance sector's
thirteen-year compound annual growth rate in the state of Kerala showed a negative
growth rate of 9.15%. Over time, Kerala's share of India's microinsurance market
has decreased.
These findings aim to inform the design of targeted strategies, tailored products, and
effective communication initiatives that resonate with the preferences and needs of
individuals in Kerala, thereby fostering increased participation and engagement with
microinsurance. In essence, this study contributes to the existing body of knowledge
by shedding light on the specific determinants that influence microinsurance
investment among individuals in Kerala. The findings hold relevance for devising
more inclusive and effective microinsurance policies and practices, ultimately
contributing to the promotion of financial resilience and risk management among the
economically vulnerable population in the region. | en_US |
