Does Access to Internet Matter for Insurance Uptake? Evidence From India

Abstract

Using the nationally representative Indian Human Development Survey- 2011-12 data, we find that access to internet is related to better risk management practices of Indian households given by higher insurance uptake. Internet access potentially generates twin benefits of improving awareness related to benefits of insurance products and helps in reducing transaction costs for the insurers. The study highlights the role of access to internet in improving development outcomes in India. Further, we find that access to internet increase the insurance uptake of urban households more than rural households and education remains a critical barrier for leveraging the development benefits of internet access. Finally, we find that access to internet is also positively associated with the extent of insurance purchased by the household, highlighting that digital inclusion in the form of internet access could be an instrument that can partially mitigate the common investment mistakes made by households in India.

Keywords: Insurance, Internet, India, Household Behavior

JEL Classification: G52, O16, O53, R22