The Union Railway Budget on Thursday proposed to provide travellers the option of buying travel insurance. Railway Minister Suresh Prabhu, in his budget speech, said the government is working with insurance companies on the issue.
“There is a continuous effort on our part to ensure safe and secure travel for our passengers, yet untoward incidents do occur. To minimise the financial loss to passengers from such events, we are working with insurance companies to offer optional travel insurance for rail journeys at the time of booking,” Mr Prabhu said. While insurance companies welcomed the move as it will increase insurance penetration, they also point out that delivery of services would be key for the success of the plan.
“People using the rail route to travel to various destinations in India are equally susceptible to accidents and other problems, similar to any kind of long-distance travel by any other mode of transport. Hence travel insurance while booking a rail journey would highly benefit travellers,” said M Ravichandran, President, Insurance, Tata AIG General Insurance.
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The Indian domestic travel insurance market is about 8-10 per cent of the total travel insurance market, which is pegged at Rs 500 crore. In the current domestic travel insurance market, a major chunk is generated from the airline sector. “This move will only help to increase the penetration of travel insurance in India through the railway sector,” Mr Ravichandran said. Tata AIG said it already offers domestic travel insurance products for rail and air passengers travelling within India and policy offers coverage for trip cancellation, accidental death, accidental medical expenses, accommodation charges due to trip delay and emergency medical evacuation benefits, he added.
Over the past 10 years, the penetration of non-life insurance sector in the country remained in the range of 0.5-0.8 per cent. However, its density has gone up from $2.4 in 2001 to $11.0 in 2014. Some industry players said since rail tickets can be purchased online as well as from the counter, the mode and ease of purchase is important. “The most important aspect is how these insurance policies will be made available to customers because there are two places from where travellers buy insurance – online or at the window. Hence, the mode and ease of purchasing of these policies will be important factors to be considered,” said Shreeraj Deshpande, head of health insurance at Future Generali India Insurance Co Ltd. “This is a good initiative as it increases insurance penetration and gives some financial protection to passengers against unfortunate circumstances while travelling. These policies will also fit the pocket of travellers as these may be priced as per the duration of the journey,” Mr Deshpande added.