Wealth Creation 101: Experts Stress Insurance Is The First Step For Financial Security

Insurance is the fundamental first step of wealth creation, yet most Indian families are “one hospitalisation away from bankruptcy” according to Harshvarshan Roongta, Chief financial planner at Roongta Securities. This can be due to inadequate coverage, necessitating a market ecosystem overhaul to boost penetration, according to insurance experts speaking at the NDTV Profit Ignite Conclave.

Harshvardhan Roongta, CFP at Roongta Securities, delivered a sharp reality check, noting that “insurance is the first step of wealth creation because you are one hospitalisation away from bankruptcy.” This is the case for especially those who are focused on wealth creation rather than protection. He stressed that India is still “scratching the surface” in terms of penetration, with most citizens “not adequately insured.”

Roongta noted that while the industry involves four stakeholders that are manufacturers, brokers, consumers and regulators, the current setup leaves the consumer at the most vulnerable part. He also noted that an “Insurance portfolio takes longer to create than an investment portfolio” due to an underlying lack of trust for policyholders. He attributes this to the lack of a certain regulation in the space, concluding that the eco system needs to favour the end consumers to drive growth.

The opportunity, however, is immense. Jyoti Swarup, a Senior Vice President at Max Life Insurance, pointed to expanding middle-class incomes and consumption-led rural growth, stating, “I believe we are going to have a far more purple patch of insurance” and that the opportunity is huge. Swarup highlighted a crucial cultural gap, noting, “One common question missing is that your spouse will never ask you about insurance." He flagged that investments are talked about widely but not insurance in conversations at homes and gatherings.

This is compounded by a preference where “We love the savings-oriented insurance rather than protection.” Despite this, with 27 lakh agents and technology enabling the onboarding journey, the stage is set for higher penetration, provided trust in this inherently “trust based product” is restored.