Innovations waiting in selling Insurance policies for Rural India!

My heart beats for Rural India. Venturewoods will have many posts from me in this regard. 

 

Till date most of the companies in India are always focused on urban market or at least they sell their products/services with the same models that of predominantly urban-market oriented. However, of the late, there is a significant shift due to the popularity of so called, “Bottom of the Pyramid” model.

One of the main vocal point of BoP model is that understand low-income people as your consumers and make your product affordable (cost or units) to the BoP market. Most of the companies, these days, have started to remodel their products/services according to this principle.

However, targeting BoP market means more than this. You need to make sure your offerings suit to the local needs. That is exactly missing in Insurance sector.

Nowadays, I have come across many insurance companies selling their policies as low as Rs. 10, Rs. 25 (much less than a US dollar). This is really a welcome step. And now coming to the other innovations part:

  1. Insurance policies should be completely flexible. Typically these are separately priced like health insurance, life insurance, vehicle insurance, farm insurance etc. I think, you should price them as a combination (as a flexible percentage and choice is given to the customer). Now let the customer choose the way he wants.
  2. Second comes from distribution aspect. Do not try to keep a separate chain of distribution. Utilize 1-2 millions telecom retail distribution chains. For the simple reason that these bring the structural efficiency in order to reduce the costs.
  3. Third comes from social angle. Most of the rural people live in joint families or at least they would love to consume services as a family. This is evident from their consumption patterns such as marriage/functions, pilgrim trips etc. So your service should consider this trick and offer them a group oriented policies. In fact, one may even consider community based policies. That would possibly become an instant hit.

In all of the above scenarios, recent advances in technology would play a great role. So insurance companies should start looking at the benefits that new tech developments could bring them.

4 Responses to “Innovations waiting in selling Insurance policies for Rural India!”

  1. Jatin Khan says:

    “Hi,
    Nie step & I think this will be success due to the poor families lacking health facilities because of their financial problems. Here is an online tools which I think you might be interested in which helps people to plan their insurance according to their needs & budget especially health insurance & retirement plan.
    Please check this out at – http://www.simpleinsurance.co.in/

  2. asit k jain says:

    Wth the sheer size of Indian rural market and its ongoing maturity,selling of insurance product to them is a big oppurtunity for existing companies. Already they are burgeoning with heavy pockets as a result of increase in commodity price and govt suppports and that too farmers in particular. Their aspiration level has also gone upfront backed with deep pockets. Now the time is ripe to decraese the vulnearbility by shifting the target base from urban to rural customers whose income will remain quite steady for some time. The financial crisis has already drained money from themarket andespecially urban customer are defensive about spending.There’s a huge unexplored KHAZANA yet to be pounded in the hinterlands of India.

  3. Mani says:

    Since working in health sector along with some health insurance providers, we are seeing some good innovations already existing in health insurance area. NGO’s are already operating with the rural masses for lot of years now[some even 50 years+]. So some of the insurance companies have tied up with them to issue premiums and also offer claims processing facilities[that is an innovation instead of depending on their agents]. The other issue of credibility was addressed by tie-ups with microfinance institutions that already cover all other insurance[minus health]. Now these NGO’s work with the microfinance wings to ensure that credit ratings of the policy holders are validated before issuing the policy. The policy in one case is issued for the women and covers the entire family with an incremental cost to cover them. These may be one-off rollouts that need to be made more prevalent. Some other innovations that are getting rolled out is to cover the health insurance for minor ailments with the help of Primary Health Centers that operate with Government aid and/or operated privately.. This adds real value to health for rural people for improving quality of health services.

  4. Well with the growing number of micro finance entities & other branch less banking entities distribution of these types of products for the rural market may not be an issue.

    Companies like Eko and Zero who will be initially offering no-frills savings account to the rural market may look forward for offering insurance, utility bill payments and other services to enhance their ARPU. One advantage here is that once the rural community have started the habit of saving , these providers can offer features like autodebt etc so that the premiums for these type of services gets deducted automatically from their accounts.

    So rather than establishing a separate distribution chain for distributing insurance products insurance companies can tie-up with branch less banking service providers, business correspondents or post offices for distributing their products to the low income group.

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