The Hindu Business Line : Majority in Kerala faces financial risks: Survey

Kochi, Sept. 3 Majority of people in Kerala have inadequate financial protection and poor saving habits, despite rising economic growth, a survey by Max New York Life Insurance Company Ltd and the National Council of Applied Economic Research (NCAER) has found.

According to the India Financial Protection Survey, 25 per cent of households in Kerala keep their savings at home and 56 per cent deposit it in banks.

The objective of the survey is to evaluate the financial risk profile of Indian households by assessing how they earn, spend and understand the significance and potential of life insurance as a risk-mitigating tool for Indian households.

Key findings

The key findings from a sample of over 63,000 Indian households and 1,954 households in Kerala and 210 households in Kochi from rural and urban areas indicate that there is little or no awareness on the need for financial protection.

Mr Rajesh Sud, Executive Director-Distributions, Max New York Life, said that there is lack of understanding about benefits of life insurance towards both financial protection and long-term wealth creation.

Findings

On the findings of the survey, Dr Rajesh Shukla, Senior Fellow and Project Leader, NCAER, said that the results showed that Indian households were in the habit of saving and optimistic about their financial future.

However, for almost a quarter of households, current income is insufficient for their routine and unusual expenditure.

While governments have a role to play for the poorest households, financial security is the responsibility of each household, and both the needs and options available are more complex today than before.

Methodology

The methodology adopted for this study is unique and was drawn from best International practices. This first-of-its-kind study assesses the income, expenditure and saving patterns of households based on primary data.

The financial risk, the spending and borrowing habits of Indian households, their perceptions about financial security and low ownership of life insurance all point to significant opportunities ahead for the life insurance industry.

Max New York Life and NCAER have been working on the India Financial Protection Survey under the guidance of an advisory panel chaired by Mr Suman K. Bery, Director General of NCAER. The panel included economist Mr Subhasis Gangopadhyay, Mr S.L. Rao, former NCAER chief and power sector regulator, and Mr D.V.S Sastry from IRDA.

The advisory panel has provided recommendations to the survey on issues related to policy, insurance regulations, supply and demand and research methodologies.

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