Title: Rural Insurance Scenario
1 Rural Insurance Scenario A Research based
presentation
By Naren N. Joshi Chief
Representative ING Insurance
International B.V.
Venue 19 October, 2004 FICCI 9th
Conference on Insurance New Delhi
2Rural Insurance Research
- FORTE- A collaboration between FICCI and ING
Insurance, has conducted two research studies to
understand the realities of the rural insurance
market space - Macro Level Study conducted through MART
- Rural Insurance Issues, Challenges
Opportunities - Micro Level Study conducted through James
Martin Co - Developing a Rural Distribution Strategy for
Insurers
3Macro Study
Objectives of the Research
- Understand rural customers current knowledge,
attitudes and practices regarding savings, loans
and insurance - Identify existing factors, if any, prohibiting
the purchase of insurance policies - Profile potential rural customer segments in
terms of attitudes, behavior and demographics - Develop a broad, cost effective distribution
strategy
4Macro Study
Key Findings of the Research
- Rural sector offers a huge business opportunity
for insurance companies - Savings ratio is a healthy 30 of income across
all socio economic segments - Awareness about Life Insurance is near universal
- 27 of CWEs already have a life policy
- 51 of all respondents have expressed intention
to purchase a life policy - There are a total of 124 million rural households
- Nearly 20 of all farmers in rural India own a
Kissan Credit Cards. The 23 million credit cards
issued till date offer a huge data base and
opportunity for insurance.
5Macro Study
Key Findings of the Research (contd.)
- Delivery infrastructure in the form of District
Cooperative Banks, Cooperative Societies, NGOs
and Self Help Groups already exists in most
villages. - Rural connectivity through IT.
- E-choupal of ITC and other similar initiatives
are available as additional delivery channels of
insurance - An extensive rural agent network for sale of Life
insurance products exists - The agent plays a major role in creating
awareness, motivating purchase and rendering
other insurance services
6Macro Study
Key Findings of the Research (contd.)
- 78 of respondents prefer various combinations
of life insurance like life accident, life
loan, life health accident. - Flexibility in Premium payments is important.
- Security of income and bulk returns, especially
for daughters marriage and childrens education
are major persuasions for taking life policy. - While individuals are undecided about purchasing
insurance from private players, members of
different groups are favorably disposed to
purchasing group insurance through a private
player vetted by the group Herd mentalitySafety
in numbers.
7Macro Study
Complementary Delivery Systems
Name of the institution/ instrument Accessibility/ coverage of each branch Rural presence/ penetration
Regional Rural Bank 15-20 villages 5000 pop size village
Commercial bank (Rural Branch) 5000 account holders spread over (35-40 villages) 5000 pop size village
Post office 5-6 villages 2000 pop size village
Cooperative society 10,000 members spread over 20-25 villages 5000 pop size village
ITC E choupal 5 to 7 villages Prosperous village
District cooperative bank 7500 accounts Block head quarter
Kissan Credit Card 12 of total no. of farmers in rural area Farmer of any village
E-choupals manned by a Sanchalak provided
with computer and internet connectivity for
procurement of agri produce and giving
information on variety of services to villagers.
8Micro Research Study
9Micro Study
Study Phase
- Develop a comprehensive description of available
channels and their delivery capabilities in the
context of rural insurance potentials - Identify and understand the concerns of insurers
and their strategies for facing the challenges
that rural market presents - Develop an Evaluation Framework as a basis for
selection, design and operationalisation of
distribution channels - Primary research in the Muzaffarnagar District of
UP for the feasibility of each available channel
applying evaluation criteria - Develop an activity based cost model to
profitably operationalise the feasible channels
10Micro Study
District Muzaffarnagar - Span of a Block
District
Per Block
Tehsils
Blocks
8
Panchayats
74
Villages
11Micro Study
Distribution Channels
Available Channels
Evaluation Criteria
Feasible Channels
Reach
Influence on target segment
Trust reliability
Business acquisition capability
Support requirements
Financial transaction handling
Operational discipline
E-Bima
Customer servicing
New Channel
12Micro Study
Suggested Strategy Model
DISTRICT COORDINATOR (1)
Insurers Resources
BLOCK COORDINATOR (14)
Coop Bank
Panchayats
Cooperatives
Agents
E-Bima
3
8
5
20
1
No of Channel Units per Block
Av. No. of Agents per LIC Dev Officer 37
13Micro Study
E-BIMA
- Infrastructure
- A Van
- A Simputer with a Printer
- Video-Audio Facility
- Human Resources
- One Driver
- Two sales cum administrative staff / agent
- Site and Mode of Operation
- Moves Village to Village
- Parks at Panchayat, Local School , Village
Chaupal - Visits 2 Villages and one haat a day
- Works 8 Hours a day
14Micro Study
Role and Benefits of E-BIMA
- Role
- Awareness Programmes
- Relationship Building and Management
- Business Acquisition
- Policy Servicing and Business Retention through
Premium Collection facilities - Other Benefits
- Support to other Channels for Policy Servicing,
Premium Collection, Policy Query Handling,
Complaint Handling, Assistance in Claim
Processing - Overcome limitations of channels
15Take Away
- The rural market offers tremendous growth
opportunities for insurance companies but their
success will depend upon their ability to - Develop viable and cost effective distribution
channels and - Build consumer awareness and confidence
- ING is one of the few private insurance companies
highly committed to the rural insurance market in
India . In fact, ING is currently running a pilot
project in rural India.
16THANKS