1 rural insurance scenario – a research based presentation venue : 19 october, 2004 ficci 9 th...
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Rural Insurance Scenario – A Research based presentation
Venue : 19 October, 2004 FICCI 9th Conference on Insurance
New Delhi
By : Naren N. Joshi Chief Representative ING Insurance International B.V.
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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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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
Macro Study
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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
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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
Macro Study
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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.
Macro Study
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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.
Complementary Delivery Systems
Macro Study
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Micro Research Study
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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
Micro Study
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Villages
Panchayats
Blocks
Tehsils
District
1031
112
14
5
1
District Muzaffarnagar - Span of a Block
74
8
Per Block
Micro Study
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Evaluation Criteria
Available Channels
Feasible Channels
Banks
Panchayats
NGO’s & SHG’s
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
Micro Study
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BLOCK COORDINATOR (14)
Coop BankPanchayatsCooperativesAgentsE-Bima
DISTRICT COORDINATOR (1)
385201
No of Channel Units per Block
Insurer’s Resources
Suggested Strategy Model
Av. No. of Agents per LIC Dev Officer : 37
Micro Study
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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
E-BIMA
Micro Study
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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
Role and Benefits of E-BIMA
Micro Study
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• 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
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THANKS
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