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Rural Micro insurance Retailing Strategy

Rural Micro insurance Retailing Strategy. IIRM Hyderabad October 14 th Vijay Athreye. TATA-AIG Insurance Distribution in Rural Areas. Multi channel approach Agency operations in Rural areas – Regular Insurance Products

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Rural Micro insurance Retailing Strategy

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  1. Rural Micro insurance Retailing Strategy IIRM Hyderabad October 14th Vijay Athreye

  2. 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

  3. 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

  4. Our Strategy Socially responsible business Relevant and Affordable products Low Cost Front end Processes Outsourced Distribution Management Supplementary Livelihoods Move up from the bottom of the pyramid Investment in Grassroots Advisor Training Committed Top Mgt And Staff Global Micro insurance Conference Munich 10/2005

  5. Rural 74 % Households Urban 26 % Households 6 25 11 3 H 4 6 22 12 UM 10 18 26 23 M LM 36 46 24 35 L 47 24 3 18 1998 – 99 1998 – 99 2006 – 07 2006 – 07 Source : NCAER Pyramid –How Long ? Global Micro insurance Conference Munich 10/2005

  6. Rural Services Can Community Service Providers be formed here ? Most Rural Service Providers belong here Poor Uptake of Services by Lower Lower Middle Global Micro insurance Conference Munich 10/2005

  7. The Product /Market Segmentation Banc Assurance ANP> 10K Agency Market ANP> 5K Brokerage /Corporate Agency Market 5K<ANP< 20K I PSS R and S Rural Market 1000<ANP < 5000 PS RP Social Products Market ANP < Rs 1000 P Global Micro insurance Conference Munich 10/2005

  8. 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 84.00 • 40 Rs 15,000.00 Rs 132.00 • 50 Rs 10,000.00 Rs 180.00 • 55 Rs 10,000.00 Rs 276.00 • Karuna Yojana (( 15 year protection plan with maturity benefits -- Premium Rs 75 per qtr. • Jana Suraksha Yojana ( 15 year protection plan with maturity benefits -- Premium Rs 180 per qtr. Global Micro insurance Conference Munich 10/2005

  9. 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 Global Micro insurance Conference Munich 10/2005

  10. Public Private Partnership with DFID TATA-AIG FDCF Personnel Infrastructure Product Training Collateral RO NGO Rural Community Insurance Groups Leader +Members Mentoring SHG’s Awareness Low Income Rural Community Mid / Higher Income Rural Market Global Micro insurance Conference Munich 10/2005

  11. 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. Global Micro insurance Conference Munich 10/2005

  12. Results MI vs. Rural and Company Global Micro insurance Conference Munich 10/2005

  13. Results Regulatory Mandate versus Actual Global Micro insurance Conference Munich 10/2005

  14. 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 Global Micro insurance Conference Munich 10/2005

  15. 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. Global Micro insurance Conference Munich 10/2005

  16. 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 Athreye AVP and National Head Rural and Social TATA-AIG Life Ins. Co. Ltd.

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