rural micro insurance retailing strategy iirm hyderabad october 14 th vijay athreye
TRANSCRIPT
Rural Micro insurance Retailing Strategy
IIRM Hyderabad October 14th
Vijay Athreye
Global Micro insurance Conference Munich 10/2005
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TATA-AIG Insurance Distribution in Rural Areas
Multi channel approach Agency operations in Rural areas – Regular Insurance
Products Alternate channels operations in Rural areas –
Regular Insurance Products Corporate agents viz Financial Intermediaries Insurance Brokers. Rural Banks
Rural and Social channels – Micro insurance and Rural Insurance products.
Regulation notwithstanding TATA-AIG Life views Rural and Micro insurance as an integral part of its business development activity in India
Global Micro insurance Conference Munich 10/2005
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Foray into MI --OBJECTIVES
Regulator YOY Growth and Industry Leadership Sustainability
3C Approach Replicable and Scalable Developmental
2/3rd of Human Race. PR Value New and Innovative
Global Micro insurance Conference Munich 10/2005
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Our StrategyRelevant
and Affordable products Outsourced
Distribution Management
Move up from the bottom
of the pyramid
Low Cost Front
end Processes
Investment in Grassroots
Advisor Training
Committed Top MgtAnd Staff
Socially responsible
business
SupplementaryLivelihoods
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Pyramid –How Long ?
Urban 26 % Households
1998 – 99 2006 – 07
25
22
26
24
3
11
12
23
35
18
3
4
10
36
47
6
6
18
46
24
Rural 74 % Households
1998 – 99 2006 – 07
L
LM
M
UM
H
Source : NCAER
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Socio Economics' Rural
3.521.5>140High
433105-140UpperMiddle
128870-105Middle
35292235-70LowerMiddle
445765< 35Low
99-00
% HH
95-96
% HH
92-93
% HH
Income Range(000’s) ----98/99 prices
Class
Can Community Service Providers be formed here ?
Most Rural
Service Providers
belong herePoor Uptake of Servicesby Lower
Lower Middle
Rural Services
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The Product /Market Segmentation
Social Products Market ANP < Rs 1000
Rural Market 1000<ANP < 5000
Brokerage /Corporate
AgencyMarket
5K<ANP< 20K
AgencyMarket
ANP> 5K
P
PS
PSS
I
BancAssurance
ANP>10K
R and S
RP
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Social ( Micro insurance ) Product Details (Read Rs 1000= US $ 22)•Kalyan Yojana ( Five year renewable
protection plan
Age Sum Assured Ann.Prem..20 Rs 15,000.00 Rs.72.00 30 Rs 15,000.00 Rs 84.0040 Rs 15,000.00 Rs 132.0050 Rs 10,000.00 Rs 180.0055 Rs 10,000.00 Rs 276.00
Age ProjectedmaturityBenefit
Sum Assured (SA in Rs )
Pure Term term with Rop Total20 13,050 6000.00 48,000.00 54,000.0030 12,150 11,000.00 40,000.00 51,000.0040 10,575 15,000.00 23,000.00 38,000.00
• Jana Suraksha Yojana ( 15 year protection plan with maturity benefits -- Premium Rs 180 per qtr.
Age ProjectedmaturityBenefit
Sum Assured (SA in Rs )
Pure Term term with Rop Total20 5175 6000.00 19000.00 25,000.0030 4500 10,000.00 15,000.00 25,000.0040 3150 13,000.00 7,000.00 20,000.00
• Karuna Yojana (( 15 year protection plan with maturity benefits -- Premium Rs 75 per qtr.
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Micro agent Model for MI retailing
Not limited to MFI’s. Revenue for the NGO Partner. Supp. Livelihood based
Developmental impact – livelihoods. Target market Development– awareness ,choice etc. Based on geo. Jurisdiction – bigger inclusive market. Service infrastructure leveraging possibilities.
More compliant implementation and control for Company.
Social—Rural Bottom up Approach. Company can plan on long term business strategy
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Public Private Partnership with DFID
Low Income Rural Community
Rural Community
Insurance GroupsLeader +Members
RONGO
Mentoring
Awareness
TATA-AIG
SHG’s
Personnel Infrastructure Training CollateralProduct
FDCF
Mid / Higher Income Rural Market
Global Micro insurance Conference Munich 10/2005
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MicroInsurance --Summary of Benefits
Untapped potential. Market. Poling of RISK and Law of LARGE Numbers. Portfolio of profits -- Some yield more some
less. Experience –Scalable and Replicable. Demonstration and Rub off effect. Developmental
Arrest of Poverty perpetuation. Rural Livelihoods.
Services Infrastructure. Choices for the poor.
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Results MI vs. Rural and Company Numbers and Premium - Micro insurance/Rural
Details Dec 01-- Nov 02 Dec 02 -- Nov 03
Dec 03 -- Nov 04
Dec 04-Jun 05
Jun 05-Nov 05
Dec 05 -- Nov 06
FYP ( Rs ) 000s 600 580 1458 2374 3126 12500
Numbers 7380 3232 10073 13388 17427 64000
Total Rural NA NA 34000 33934 37100 135000
Micro insurance percent in Rural
NA NA 30 39 45 48
Microinsrance percent of Company numbers
NA NA 5 9.1 9.3 12
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Results Regulatory Mandate versus Actual
Mandate/Achievement
Parameter Year 1 Year 2 Year 3 Year4 Apr 05 to Mar 06 Yr 6 onwards
YTD Jun
Proj.
Rural
Requirement Percent of New Policies
5% 9% 12% 14% 16% 16% 18%
Achievement Percent of New Policies
10.60% 10.30% 14.30% 17.85% 25.50% 21% 23%
Social
Requirement No. of New Social Sector lives
5000 7500 10000 15000 20000 25000
Achievement No. of New Social Sector lives
9000 9344 10758 16117 100000 40000 Will be met
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Challenges
Sustainability and Persistency Products
Relevant ,affordable and Profitable. Personnel
New Breed --- Committed ,suitable. Organization
Vision and Long term Commitment Adaptability of Processes
Regulator Policy framework.
Economy Cascading growth
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With a little Help !!
Regulations on MI. Type of agents. Agent Licensing procedures. Long tenure products (10-15 years ) Composite products /agents , bundling of
riders etc. Levellized commission structure. Concept of a servicing agent. TDS on small earnings.
There is fortune at the bottom of the pyramid. The key question -- how businesses can become
more inclusive to reach this segment ? When rural development becomes a key business
concern we should have a win-win situation !!
Vijay AthreyeAVP and National Head
Rural and SocialTATA-AIG Life Ins. Co. Ltd.