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BASIXEquity for Equity
Micro Insurance-Effective Renewal and Participation
Rate
Presentation by BASIX,15-Oct-05
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BASIXEquity for Equity
Contents
Introduction to BASIX
Insurance services at BASIX
Participation and Renewal in insurance
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BASIXEquity for Equity
Reach
• States(8)– Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra,
Madhya Pradesh, Orissa, Jharkhand, Rajasthan
• No of Villages(10,393)
• No of customer(Direct+Indirect)-0.25 Mn
• No of Staff (1,456)
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BASIXEquity for Equity
1.Deoghar25. Jamshedpur 26. Ranchi
21.Aska22.Berhampur23. Nayagarh
1.Adilabad2.Adoni3.Anantapur4.Bhadrachalm5.Bhainsa6.Hindupur7.Hyderabad (Urban Micro Finance)
1.Kadapa2.Khammam3.Madhira
1.Nalgonda2.Nandyal3.Nirmal4.Nizamabad5.Proddutur16. Ramayampet17. Siddipet18. Srikakulam19. Suryapet20. Vikarabad& KBS Bank (Mahabubnagar)
27.Jabalpur28. Shajapur& Indore
29.Bhandara30.Chandrapur31.Nanded32.Parbhani33.Umerkhed34. Wardha35.Yavatmal
36.Bellary &KBS Bank (Raichur, Gulbarga)
SNFL
Dausa & Daulpur
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BASIXEquity for Equity
The need for Insurance
• IMRB study – Impact of micro-credit– Increase in borrower income, asset ownership and social
participation in a small way– Customer satisfaction on service and terms high– Credit alone has limited impact on livelihoods– Issues: Unmanaged risk and low productivity and low price
realisation
• Review of strategy:– Add risk mitigation services (insurance, derivatives, no-
financial .e.g. vaccination) – Ag/business development services for productivity enhancement,
value addition and market linkages
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BASIXEquity for Equity
Addressing risks through
• Risk mitigation services like – preventive vaccination for livestock– integrated pest management (IPM) practices for
crops
• Risk management services
– Insurance– Derivatives
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BASIXEquity for Equity
Insurance-Products
Policies Avg Sum Insured
(Rs)Since As on
30-Sep-05
Lives under Group Policy
Oct-2002 1,30,000 15,000
Lives under: Retail Policies
Dec-2003 13,000 22,000
Health Insurance Customers
May-2005 64,000 36,500
Livestock Insured Oct-2002 13,000 8,000
Rainfall Ins
customers
June-2003 7,000 5000
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BASIXEquity for Equity
Insurance-Service Performanceas on 30-Sep-05
back
Claims Settled Settled amount
Rs
Life 307 40,00,000
Livestock 357 27,00,000
Health 6 9,000
Rainfall 305 4,50,000
Total 975 71,59,000
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BASIXEquity for Equity
Insurance Business Model
Insurer BASIX Rural Customer
Offer products Distribute Insurance
Feedback on needsInputs for products
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BASIXEquity for Equity
Support for insurance services
• BASIX has– 120 professionally qualified (MBAs and M.Sc-
Ag) specified persons to sell insurance– business relationships with 3 insurance
companies– online MIS
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BASIXEquity for Equity
The formula?
(Participation, Renewal)
= fn(1.customer education
2.incentive to the channel,
3.effective MIS
4.simplicity of product and process
5.channel depth and efficiency,
6.communication,
7.service quality,
8.pricing)
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BASIXEquity for Equity
1. Customer Education
• May not result in an immediate rise in participation
• But is an important prerequisite to build the long term market
• This task is some times seen as the responsibility of the NGO sector
• There is a need for Insurance companies too to invest
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BASIXEquity for Equity
2. Incentives to the channel
• First level: distribution cost to be covered
• Second level: service cost to be covered
• Third level: +ve contribution to distribution channel
• Case of high lapsation in rural life insurance policies in the absence of the above
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BASIXEquity for Equity
3. Effective MIS
• Need for design of MIS specific to channel
• Insurance co’s MIS is sometimes frozen to past business practices
• e.g. inability of insurance co to provide information at a disaggregate level
• Business model should dictate the MIS. MIS capacity should not dictate the business model
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BASIXEquity for Equity
4. Simplicity in product and process
• Convenience in premium remittance
• Flexible renewal premium payment in Life Insurance
• Keep fine print and exclusions to the minimum
• Minimal documentation
• Simplicity is necessary not only to increase comfort to customer but also to the field advisor
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BASIXEquity for Equity
5. Channel depth and efficiency
• It still has to be sold!
• Therefore overall performance is still dependent on the ability of the sellers than on the customers
• Ability to reach the last mile is still the challenge
• To reach and service the last mile in a cost effective manner needs innovations in business processes.
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BASIXEquity for Equity
6. Communication
• Most promotional literature still happens in English
• Need for providing product literature, proposal forms and policy contract notes in different vernacular languages
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BASIXEquity for Equity
7. Service
• Early intimation of renewal
• Assistance in the event of claim
• Rationalise claim documentation
• Prompt claim settlement
• A happy customer provides the best marketing advantage
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BASIXEquity for Equity
8. Pricing
• Tendency/Advocacy to price rural products below cost-Vicious cycle
• In a Free/Near Free lunch, service can neither be demanded nor delivered
• E.g-Crop Insurance
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BASIXEquity for Equity
Pricing
• Products priced in a sustainable manner creates a Virtuous Cycle
• Service will be demanded
• Creates scope for continuous product and service improvement
• Role for subsidy: training, capacity building, implementing operational systems and MIS.