8/3/2019 Rural Insurance Scenario

1/16

1

Rural Insurance Scenario A Research based presentation

8/3/2019 Rural Insurance Scenario

2/16

2

Rural Insurance Research

FORTE- A collaboration between FICCI and ING Insurance,has conducted two research studies to understand therealities 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

8/3/2019 Rural Insurance Scenario

3/16

3

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

8/3/2019 Rural Insurance Scenario

4/16

4

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.

Macro Study

8/3/2019 Rural Insurance Scenario

5/16

5

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

8/3/2019 Rural Insurance Scenario

6/16

6

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 daughtersmarriage and childrens education are major persuasions fortaking life policy.

While individuals are undecided about purchasing insurance

from private players, members of different groups are favorablydisposed to purchasing group insurance through a private playervetted by the group Herd mentalitySafety in numbers.

8/3/2019 Rural Insurance Scenario

7/16

7

Name of the institution/

instrument

Accessibility/ coverage of eachbranch

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 inrural area

Farmer of any village

* E-choupals manned by a Sanchalak provided with computer and internet connectivity forprocurement of agri produce and giving information on variety of services to villagers.

Complementary Delivery Systems

8/3/2019 Rural Insurance Scenario

8/16

8

Micro Research Study

8/3/2019 Rural Insurance Scenario

9/16

9

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 ofUP for the

feasibility of each available channel applying evaluationcriteria

Develop an activity based cost model to profitably

operationalise the feasible channels

8/3/2019 Rural Insurance Scenario

10/16

10

Villages

Panchayats

Blocks

Tehsils

District

1031

112

14

5

1

District Muzaffarnagar - Span of a Block

74

8

Per Block

Micro Study

8/3/2019 Rural Insurance Scenario

11/16

11

Evaluation Criteria

Available Channels

Feasible Channels

Banks

Panchayats

NGOs & SHGs

Cooperatives

Agents

Post Offices

Industrial Fin

Inst.

Cybermediaries

Eco Exchange Pts

Brokers

Coop Banks

Panchayats

Cooperatives

Agents

Reach

Support requirements

Business acquisition capability

Influence on target segment

Operational discipline

Customer servicing

Financial transaction handling

E-Bima

New Channel

Trust & reliability

Distribution Channels

8/3/2019 Rural Insurance Scenario

12/16

12

BLOCK COORDINATOR (14)

Coop BankPanchayatsCooperativesAgentsE-Bima

DISTRICT COORDINATOR (1)

385201

No of Channel Units per Block

Insurers

Resources

Suggested Strategy Model

Av. No. of Agents per LIC Dev Officer : 37

8/3/2019 Rural Insurance Scenario

13/16

13

Infrastructure

A Van A Simputer with a Printer

Video-Audio Facility

Human Resources

One Driver Two sales cum administrative staff / agent

Site and Mode ofOperation

Moves Village to Village Parks at Panchayat, Local School , Village Chaupal

Visits 2 Villages and one haat a day

Works 8 Hours a day

E-BIMA

8/3/2019 Rural Insurance Scenario

14/16

14

Role

Awareness Programmes

Relationship Building and Management

Business Acquisition

Policy Servicing and Business Retention through PremiumCollection facilities

Other Benefits

Support to other Channels for Policy Servicing, PremiumCollection, Policy Query Handling, Complaint Handling,Assistance in Claim Processing

Overcome limitations of channels

Role and Benefits of E-BIMA

8/3/2019 Rural Insurance Scenario

15/16

15

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.

Take Away

8/3/2019 Rural Insurance Scenario

16/16

16

THANKS