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Micro Insurance- Effective Renewal and Participation Rate

Micro Insurance- Effective Renewal and Participation Rate. Presentation by BASIX, 15-Oct-05. Contents. Introduction to BASIX. Insurance services at BASIX. Participation and Renewal in insurance. Introduction to BASIX. Reach. States(8)

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Micro Insurance- Effective Renewal and Participation Rate

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  1. Micro Insurance-Effective Renewal and Participation Rate Presentation by BASIX, 15-Oct-05

  2. Contents Introduction to BASIX Insurance services at BASIX Participation and Renewal in insurance

  3. Introduction to BASIX

  4. Reach • States(8) • Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, Orissa, Jharkhand, Rajasthan • No of Villages(10,393) • No of customer(Direct+Indirect)-0.25 Mn • No of Staff (1,456)

  5. BHARTIYA SAMRUDDHI FINANCE LIMITED STATE WISE UNITS OPERATIONS Dausa & Daulpur 27.Jabalpur 28. Shajapur & Indore • Deoghar • 25. Jamshedpur • 26. Ranchi 29.Bhandara 30.Chandrapur 31.Nanded 32.Parbhani 33.Umerkhed 34. Wardha 35.Yavatmal 21.Aska 22.Berhampur 23. Nayagarh • Adilabad • Adoni • Anantapur • Bhadrachalm • Bhainsa • Hindupur • Hyderabad • (Urban Micro Finance) • Kadapa • Khammam • Madhira • Nalgonda • Nandyal • Nirmal • Nizamabad • Proddutur • 16. Ramayampet • 17. Siddipet • 18. Srikakulam • 19. Suryapet • 20. Vikarabad • & KBS Bank (Mahabubnagar) 36.Bellary & KBS Bank (Raichur, Gulbarga) SNFL

  6. The need for Insurance • IMRB study – Impact of micro-credit • Increase in borrower income, asset ownership and social participation in a small way • Customer satisfaction on service and terms high • Credit alone has limited impact on livelihoods • Issues: Unmanaged risk and low productivity and low price realisation • Review of strategy: • Add risk mitigation services (insurance, derivatives, no-financial .e.g. vaccination) • Ag/business development services for productivity enhancement, value addition and market linkages

  7. Insurance services at BASIX

  8. Addressing risks through • Risk mitigation services like • preventive vaccination for livestock • integrated pest management (IPM) practices for crops • Risk management services • Insurance • Derivatives

  9. Insurance-Products

  10. Insurance-Service Performanceas on 30-Sep-05 back

  11. Insurance Business Model Distribute Insurance Offer products Rural Customer Insurer BASIX Inputs for products Feedback on needs

  12. Support for insurance services • BASIX has • 120 professionally qualified (MBAs and M.Sc-Ag) specified persons to sell insurance • business relationships with 3 insurance companies • online MIS

  13. Participation and Renewal in insurance

  14. The formula? (Participation, Renewal) = fn(1.customer education 2.incentive to the channel, 3.effective MIS 4.simplicity of product and process 5.channel depth and efficiency, 6.communication, 7.service quality, 8.pricing)

  15. 1. Customer Education • May not result in an immediate rise in participation • But is an important prerequisite to build the long term market • This task is some times seen as the responsibility of the NGO sector • There is a need for Insurance companies too to invest

  16. Educational program on Insurance

  17. 2. Incentives to the channel • First level: distribution cost to be covered • Second level: service cost to be covered • Third level: +ve contribution to distribution channel • Case of high lapsation in rural life insurance policies in the absence of the above

  18. 3. Effective MIS • Need for design of MIS specific to channel • Insurance co’s MIS is sometimes frozen to past business practices • e.g. inability of insurance co to provide information at a disaggregate level • Business model should dictate the MIS. MIS capacity should not dictate the business model

  19. 4. Simplicity in product and process • Convenience in premium remittance • Flexible renewal premium payment in Life Insurance • Keep fine print and exclusions to the minimum • Minimal documentation • Simplicity is necessary not only to increase comfort to customer but also to the field advisor

  20. 5. Channel depth and efficiency • It still has to be sold! • Therefore overall performance is still dependent on the ability of the sellers than on the customers • Ability to reach the last mile is still the challenge • To reach and service the last mile in a cost effective manner needs innovations in business processes.

  21. 6. Communication • Most promotional literature still happens in English • Need for providing product literature, proposal forms and policy contract notes in different vernacular languages

  22. 7. Service • Early intimation of renewal • Assistance in the event of claim • Rationalise claim documentation • Prompt claim settlement • A happy customer provides the best marketing advantage

  23. Rainfall insurance claim settlements in Nov-04

  24. 8. Pricing • Tendency/Advocacy to price rural products below cost-Vicious cycle • In a Free/Near Free lunch, service can neither be demanded nor delivered • E.g-Crop Insurance

  25. Pricing • Products priced in a sustainable manner creates a Virtuous Cycle • Service will be demanded • Creates scope for continuous product and service improvement • Role for subsidy: training, capacity building, implementing operational systems and MIS.

  26. Thank You www.basixindia.com gunaranjan@basixindia.com

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