Mumbai, November 24: As Indian economy passes through a transitional phase, job losses have become a reality. From textiles to IT to telecom, both old and emerging sectors have witnessed reduction in workforce. In such an environment, need for job loss insurance cover has risen with many companies offering such products.
“Job loss insurance cover is a good product offered by many companies in the market. It is provided as an add-on with other products like home insurance or personal accident insurance covers. Though demand for such products is not robust now, things will definitely improve in coming years,” managing director and chief executive officer of Bajaj Allianz General Insurance, Tapan Singhel told ‘The Finapolis’.
Though demand for health insurance cover has gone up in the country, home insurance cover has not picked up as expected. Due to this, job loss insurance is still not seeing the traction, Singhel added.
Job loss insurance cover is the latest entrant in the general insurance industry in India though demand for these products is high in developed markets. As part of this cover, the insurance company pays up EMIs of the insured for three months during a job loss in case the insured has any pending loan. The policy assumes that it takes typically three months to get a new job and provides cover during this period.
On the issue of job loss covers as standalone products, Singhel said that standalone products would be launched with time as demand for such products picked up.
India has seen a wave of job losses in recent years owing to general economic environment, mergers and acquisitions, business restructuring and rising competitions among others. As per reports, textile sector has seen closure of around 60 units in last three years impacting more than 17,000 jobs. Similarly, IT companies have also reduced their headcount after US administration made H-1B issuance norms tougher in recent months. Telecom sector is one of the worst hit sectors with new entrant Reliance Jio causing major disruptions in the industry. This has led to many people losing their jobs in last one year. Analysts are of the opinion that with advent of disruptive business models, job losses will rise in many sectors, which will push up demand for job loss insurance covers.
Currently, job loss insurance cover constitutes less than 1% of the total gross written premium (GWP) of the industry. Total premium collections of the industry stood at Rs 1.27 lakh crore in the fiscal year 2016-17, a growth of around 32% over the same period of previous fiscal.