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.

Malapati Raja Sekhar

I work with few small startups focused on rural services (for-profit). I am based in Mumbai, India.