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

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 Rural 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”

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 Macro 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

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 Macro 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.

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 Macro Study

Key Findings of the Research (contd.)

 Delivery infrastructure in the form of District Cooperative
Banks, Cooperative Societies, NGO’s 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

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 Macro 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 daughter’s
marriage and children’s 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 mentality…Safety in
numbers.

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 Macro Study

Complementary Delivery Systems

Name of the institution/ Accessibility/ coverage of each Rural presence/ penetration
instrument branch
Regional Rural Bank 15-20 villages 5000+ pop size village
Commercial bank (Rural 5000 account holders spread over 5000+ pop size village
Branch) (35-40 villages)
Post office 5-6 villages 2000+ pop size village
Cooperative society 10,000 members spread over 20- 5000+ pop size village
25 villages
*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 Farmer of any village
area

* 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.

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Micro Research Study

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 Micro 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

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 Micro Study

District Muzaffarnagar - Span of a Block

District 1
Per Block
Tehsils 5
Blocks 14 8
Panchayats 112 74
Villages 1031
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 Micro Study

Available Channels
Distribution Channels
Banks
Cooperatives Evaluation Criteria

Panchayats
Reach Feasible Channels
Agents
Influence on target segment Coop Banks
Post Offices Trust &
reliability Cooperatives
Business acquisition
Cybermediaries
capability Panchayats
Industrial Fin Support requirements
Financial transaction
Inst. Agents
handling
Eco Exchange Pts Operational discipline
Customer servicing E-Bima
Brokers
NGO’s &
New Channel
SHG’s

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 Micro Study

Suggested Strategy Model

DISTRICT
Insurer’s
COORDINATOR (1)
Resources
BLOCK
COORDINATOR (14)

E-Bima Agents
Cooperatives Coop Bank
Panchayats

1 20 5 8 3

No of Channel Units per Block

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

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 Micro 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
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 Micro 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
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 Take 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.

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THANKS

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