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

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

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

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.
4

Macro Study

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
5

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 daughters
marriage and childrens 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 mentalitySafety in numbers.

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.

Micro Research Study

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
9

Micro Study

District Muzaffarnagar - Span of a Block

District

1
Per Block

Tehsils

Blocks

14

Panchayats

112

74

Villages

1031
10

Micro Study
Available Channels

Banks
Cooperatives
Panchayats
Agents
Post Offices

Cybermediaries
Industrial Fin
Inst.
Eco Exchange Pts

Brokers
NGOs & SHGs

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
11

Micro Study

Suggested Strategy Model

DISTRICT COORDINATOR (1)

Insurers
Resources

BLOCK COORDINATOR (14)

E-Bima
1

Agents Cooperatives Panchayats Coop Bank

20

No of Channel Units per Block

Av. No. of Agents per LIC Dev Officer : 37
12

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
13

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

14

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.

15

THANKS

16