RURAL BANKING

IMPACT OF INSURANCE IN RURAL

AREAS

Presented by:
HITESH JUSTA
GURWINDER SINGH
SHIVAM TIWARI
MEHARWAN SINGH
 INTRODUCTION
 Rural areas in our country are marked with agriculture and farming as
the core occupation.
 Apart from these, other income generating sources like poultry
farming, cattle rearing, bee culturing and fish culturing also have their
place.
 Despite of having many income sources, profits for the rural population
are highly unpredictable, the reason being many factors impacting
their 'produce'. In case of agriculture and farming, the production rate
is precarious due to the constant changes in the climatic conditions
that affect the crop.
 INTRODUCTION
 Even non-agriculture income sources like poultry, cattle etc., may not
give the expected outcome because of the effect of failing health due to
epidemic or endemic diseases.
 In such cases securing his assets financially will reduce bumps of losses
of a farmer, which is possible only by "insurance".
 Extending the insurance policies and services to the rural areas will not
only benefit the farmers, peasants and artisans but can also expand the
business of the insurance companies burgeoning their profits.
 DEFINING THE PROBLEM
 Insurance is bought lesser in India by rural population. General

insurance is often bought because there are compulsions under the law

or from the financiers asking for insurance as collateral security. In the

case of life insurance, there is very little compulsion.

 The tendency is to defer the decision. The possibility of death is

ignored by the rural people; however there is more possibility of such

misfortune for people lives in rural areas.

 DEFINING THE PROBLEM
 The rural people never believe that they can succumb to destiny and

they think they will live a long and healthy life.

 The rural population in India is without life insurance cover and this

part of the population is also subject to weak social security and

pension systems with hardly any old age income security.

 Review of literature
Gupta (2014) analysed the status of rural insurance penetration and reasons
behind the poor performance of insurance companies. He emphasized that
life insurance sector have developed in Indian but still the penetration is low
in rural sectors. The reasons behind the less popularity of life insurance
products are lack of awareness, motivation and timely settlement of claims.
To increase the insurance coverage insurance companies must design new
products and they should explore more alternative distribution channels.
Periyasamy & Rao (2014) stated that rural insurance market is dominated by
Life Insurance Corporation of India. The paper explores the reasons for low
penetration of private companies in rural market. The study revealed that
insurance products are not designed for rural people and promotional
activities are also inadequate.
 Review of literature
Jyothi (2010) discussed that insurance is mainly concentrated around urban
and rural areas are ignored. The insurance companies had adopted various
marketing strategies but still their penetration is less in rural sector.
Ramalakshmi & Ramalingam (2014) conducted a study to analyse awareness
of policyholders about micro insurance products. They concluded that there is
awareness of about micro insurance among urban and rural population. The
agents played a major role in creating awareness among policyholders.
Rewadikar & Soni (2013) studied the impact of IRDA on various aspects of
insurance sector like regulation, customer education, development insurance
products, distribution channels etc.
 RESEARCH
METHODOLOGY
 Type of data:
 The type of data collected was primary and secondary data. Under
secondary data it was classified under external secondary data as the
data was taken from published papers and journals. The data collected
was qualitative as well as quantitative. The primary data was collected
from the villages through personal interview and questionnaire
method.
 Target audience & Sample Size:
 The target audience for this study were the rural people. The data was
collected from the sample size of 50.
 RESEARCH
METHODOLOGY
 Sampling Method:
 The method used for sampling was Probability Sampling Method.
Every sample was selected randomly or everybody had an equal chance
of getting selected as a sample. .
 Research Element: To study awareness of people about insurance and
its schemes and to determine reasons behind opting for an insurance.
The aim was to study the types of benefits provided by insurance
services to the rural population.
 ANALYSIS
70%
EDUCATION PERCENTAGE
60% QUALIFIED

50% UNDERGRADU 6%
ATE
40%

ILLITERATE 65%
30%

20% MATRIC 20%

10%
POST 9%
0% GRADUATE
Undergraduate illitrate matric post graduatre
 ANALYSIS
50%
Tenure Percentage
45%

40%

35% Less than 5 years 35%

30%

25%
More than 5 years 45%
20%

15%

10%
10-15 years 20%

5%

0%
less than 5 more than 5 10-15 years
 ANALYSIS
45%
INSURANCE PERCENTAGE
40%

35%
LIFE INSURANCE 40%

30% HEALTH 30%

INSURANCE
25%

20%
CROP 26%
15% INSURANCE
10%

CATTLE 4%
5%
INSURANCE
0%
life insurance health insurance crop insurance cattle insurance
 ANALYSIS
70%

AGE %
60%

50%
25 – 35 60%

40%
35 – 45 25%

30%

45 – 55 15%
20%

10%
After 55 5%

0%
After 25 after 35 After 45 Anytime
 FINDINGS
 It is clearly seen that insurance companies have not been able to
penetrate the rural market as it still remains an untapped market for
them
 There is almost no literacy regarding the insurance in the rural areas
which is adding to the problems of the insurance companies.
 There are certain policies which are not accordingly to the needs of the
rural people which resist rural people to go for insurance
 Rural people are unaware of certain insurance policies that are
particularly designed according to their needs due to lack of awareness.
 The insurance companies especially private sector have shown least
interest in entering the rural market.
 CONCLUSION
 The life insurance companies in India are developing new products but,
they fail to penetrate in rural areas where huge market lies. The
penetration level of life insurance in India is very low compared to
international standards and therefore has tremendous potential for
growth.
 However, the market may be rich in potential, but new companies facing
challenges. The villagers’ awareness and improved distribution networks
are the keys for the market enrichment. Insurer must put appropriate
resource to develop the distribution network in order to grasp the
potential of the rural market.
 In order to capture the rural insurance market, the life insurance
companies must develop simple insurance product that is suitable for the
rural people
 CONCLUSION
 Investment linked insurance product with marginal premium may be
good option. The payment schedule of premium may base on suitable
time of harvesting since agriculture is main source of income of rural
people.
 The alternative distribution channels should explore by the insurance
companies especially for private companies. Agents of rural market
required proper training and motivated by incentives and more
commission etc.
 To summarize The Road Map of life insurance in rural India is passes
through milestones of awareness, affective distribution channels,
customized products, low premium, after sale services and quick
settlement of claims.