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
1
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”
2
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
3
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.)



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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/
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 2025 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.
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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
10
Micro Study
Available Channels
Banks
Cooperatives
Panchayats
Agents
Post Offices
Cybermediaries
Industrial Fin
Inst.
Eco Exchange Pts
Brokers
NGO’s & SHG’s
Distribution Channels
Evaluation Criteria
Reach
Influence on target segment
Trust & reliability
Feasible Channels
Coop Banks
Cooperatives
Business acquisition capability
Support requirements
Panchayats
Financial transaction handling
Agents
Operational discipline
Customer servicing
E-Bima
New Channel
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Micro Study
Suggested Strategy Model
DISTRICT COORDINATOR (1)
Insurer’s
Resources
BLOCK COORDINATOR (14)
E-Bima
1
Agents Cooperatives Panchayats Coop Bank
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
Role and Benefits of E-BIMA
•
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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