Presentation on  Rural Insurance Research  Venue : 25 th  September, 2002 FICCI’s Seventh International Conference on Insu...
FORTE Foundation of Research, Training and Education in Insurance <ul><li>FORTE- A collaboration between FICCI and ING Ins...
Background To The Research <ul><li>To test and validate the hypothesis that “ Rural Insurance is a profitable, commercial ...
Objectives Of The Research <ul><li>Understand rural customers’ current knowledge, attitudes and practices regarding saving...
Research Design <ul><li>Study has been conducted in two phases  </li></ul><ul><li>(a) Qualitative  (b) Quantitative </li><...
Research Design <ul><li>Phase I Sample Size : 148 Depth Interviews, 6 FGD’s & 32 Depth Interviews at Rural Institutions ac...
Annual Household Money Flows Estimated Avg.income:   54000   40000   32000 Range of income:  20k – 200k  15k-150k  5k - 80...
Saving Habit  (Figures in %) Avg. saving in - formal insts.:   12400 9500   5900 - insurance:  3500 3000   2900 <ul><li>Th...
Penetration of Insurance Products <ul><li>Over one-third have insurance, with life insurance having the maximum penetratio...
Awareness of Types of Insurance <ul><li>Awareness of life insurance is almost universal, but much less for general insuran...
Intention to Purchase Insurance <ul><li>Most respondents do intend to purchase an insurance policy in the future, especial...
Perceived Benefits of Taking  Life Policy <ul><li>Security of income and bulk returns, especially for daughter’s marriage ...
Perceived Benefits of Taking  General Insurance <ul><li>Respondents of all affluence levels agreed that the benefit of gen...
Hierarchy of Insurance Needs <ul><li>More than three-quarters (78%)  ranked various combinations of life insurance as the ...
Agent Network <ul><li>An extensive rural agent network for sale of Life insurance products exists </li></ul><ul><li>The ag...
Complementary Delivery Systems * E-choupals manned by a “Sanchalak” provided with computer and  internet connectivity for ...
Intention To Purchase Insurance  From Private Players <ul><li>While individuals are undecided about purchasing insurance f...
Target Market for Life Insurance  * Total Rural population  -  742 million Segment A (Class X +) – most affluent Target ma...
Recommendations for Strategy Formulation - Life & General <ul><li>Need for establishing credibility of private player </li...
Recommendations for Strategy Formulation – Life & General <ul><li>This is an internet-based co-ordination point for purcha...
Recommendations for Strategy Formulation - Life & General <ul><li>NGOs working in micro-finance with grass-root reach, tru...
Existing Definitions of ‘Rural’ IRDA Max. Pop.= 5000, pop density =< 400 per sq km, at least 75% male working pop engaged ...
Definition of Rural for The  Insurance Sector <ul><li>Considering factors like continuum of economic activity between rura...
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Sep Insurance Ing

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Sep Insurance Ing

  1. 1. Presentation on Rural Insurance Research Venue : 25 th September, 2002 FICCI’s Seventh International Conference on Insurance Research Conducted by MART By : Naren N. Joshi Chief Representative ING Insurance International B.V.
  2. 2. FORTE Foundation of Research, Training and Education in Insurance <ul><li>FORTE- A collaboration between FICCI and ING Insurance </li></ul><ul><li>The Foundation aims to help the growth of a vibrant insurance industry and facilitate growth of world class professionalism through research, training and education </li></ul><ul><li>Focus on : </li></ul><ul><ul><li>Insurance education </li></ul></ul><ul><ul><li>Consumer awareness / education programs </li></ul></ul><ul><ul><li>Research projects in insurance </li></ul></ul><ul><ul><li>Publishing research reports and other materials to enrich insurance literature </li></ul></ul><ul><ul><li>Instituting National level Awards for recognizing outstanding achievements </li></ul></ul><ul><ul><li>Co-operation with IIMs, NIA and other academic institutions for better Industry-Academia collaboration </li></ul></ul>
  3. 3. Background To The Research <ul><li>To test and validate the hypothesis that “ Rural Insurance is a profitable, commercial proposition for the new players too !! </li></ul><ul><li>FORTE and MART (Marketing And Research Team) collaborate for the Study </li></ul>
  4. 4. Objectives Of The Research <ul><li>Understand rural customers’ current knowledge, attitudes and practices regarding savings, loans and insurance </li></ul><ul><li>Identify existing factors, if any, prohibiting the purchase of insurance policies </li></ul><ul><li>Profile potential rural customer segments in terms of attitudes, behavior and demographics  </li></ul><ul><li>Develop a broad, cost effective distribution strategy </li></ul><ul><li>Explore new definitions of ‘rural’ w.r.t. insurance sector </li></ul>
  5. 5. Research Design <ul><li>Study has been conducted in two phases </li></ul><ul><li>(a) Qualitative (b) Quantitative </li></ul><ul><li>Customer Segment: (a) Chief Wage Earner (b)18-45 years (c) All socio-economic levels </li></ul><ul><li>Delivery Systems: Depth interviews with personnel at rural institutions which are seen as potential channels for insurance products </li></ul><ul><li>Population strata of villages covered : a) > 5000 b) 1000-5000 </li></ul>Mehboobnagar, East Godavari Varanasi Gonda Muzaffarnagar, Etawah Districts AP Eastern UP Western UP Geographical regions
  6. 6. Research Design <ul><li>Phase I Sample Size : 148 Depth Interviews, 6 FGD’s & 32 Depth Interviews at Rural Institutions across 27 villages </li></ul><ul><li>Phase II Sample Size : 1172 structured interviews and 21 Depth Interviews at Rural Institutions </li></ul>
  7. 7. Annual Household Money Flows Estimated Avg.income: 54000 40000 32000 Range of income: 20k – 200k 15k-150k 5k - 80k Savings ratio: 35% 30% 30% (Avg. values (Rs.) <ul><li>As would be expected, educational levels are correlated to income & also to higher spending and saving </li></ul>
  8. 8. Saving Habit (Figures in %) Avg. saving in - formal insts.: 12400 9500 5900 - insurance: 3500 3000 2900 <ul><li>The more affluent are more likely to save in formal institutions and with insurance, with insurance constituting a large part of the savings pie. </li></ul>
  9. 9. Penetration of Insurance Products <ul><li>Over one-third have insurance, with life insurance having the maximum penetration. </li></ul>% Figures in %
  10. 10. Awareness of Types of Insurance <ul><li>Awareness of life insurance is almost universal, but much less for general insurance products. </li></ul>
  11. 11. Intention to Purchase Insurance <ul><li>Most respondents do intend to purchase an insurance policy in the future, especially those with no policy currently. The more affluent are most keen to purchase some form of insurance. </li></ul>Figures in %
  12. 12. Perceived Benefits of Taking Life Policy <ul><li>Security of income and bulk returns, especially for daughter’s marriage and children’s education are the major reasons for taking life policy. </li></ul>Mean Score (maximum 3)
  13. 13. Perceived Benefits of Taking General Insurance <ul><li>Respondents of all affluence levels agreed that the benefit of general insurance is security of assets, despite its low penetration and mandatory nature. </li></ul>Mean Score (maximum 3)
  14. 14. Hierarchy of Insurance Needs <ul><li>More than three-quarters (78%) ranked various combinations of life insurance as the most important. Insuring assets were not such a priority </li></ul>Figures in %
  15. 15. Agent Network <ul><li>An extensive rural agent network for sale of Life insurance products exists </li></ul><ul><li>The agent plays a major role in creating awareness, motivating purchase and rendering other insurance services </li></ul><ul><li>An agent generally enjoys a position of trust and respect within the community and has created consumer expectations for a highly personalized service. </li></ul><ul><li>New players may need support of at least a limited agent network for their distribution / delivery systems </li></ul><ul><li>Cost effective options exist for leveraging existing rural institutions with synergic potential for delivery of insurance products / services </li></ul>
  16. 16. Complementary Delivery Systems * E-choupals manned by a “Sanchalak” provided with computer and internet connectivity for procurement of agri produce and giving information on variety of services to villagers. Block head quarter 7500 accounts District cooperative bank Farmer of any village 12% of total no. of farmers in rural area Kissan Credit Card 2000+ pop size village 5-6 villages Post office 5000+ pop size village 5000 account holders spread over (35-40 villages) Commercial bank (Rural Branch) 5000+ pop size village 10,000 members spread over 20-25 villages Cooperative society Prosperous village 5 to 7 villages *ITC E choupal 5000+ pop size village 15-20 villages Regional Rural Bank Rural presence/ penetration Accessibility/ coverage of each branch Name of the institution/ instrument
  17. 17. Intention To Purchase Insurance From Private Players <ul><li>While individuals are undecided about purchasing insurance from private players, members of different groups are favorably disposed to purchasing group insurance through a private player vetted by the group. </li></ul>Base 1172 66 103 75 Group Insurance Figures in %
  18. 18. Target Market for Life Insurance * Total Rural population - 742 million Segment A (Class X +) – most affluent Target market for Individual policies 11% Segment B (Class V - IX) –affluent Target market for Individual policies 25% National Rural Population (%) Segment C (less than Class V) – least affluent Target market for Group policies 64% Segment
  19. 19. Recommendations for Strategy Formulation - Life & General <ul><li>Need for establishing credibility of private player </li></ul><ul><li>Create awareness and interest through regional mass media – TV viewership 59% ; newspaper readership 58% ; radio 50% </li></ul><ul><li>Follow up with interactive rural media. Mandis for selling accident,health,tractor and vehicle policies and co-operatives for crop, produce and agri-implements policies </li></ul>Communication <ul><li>Life policies and ‘Life Plus’ products in combination with Accident and/or Health and/or Loan facility </li></ul>Product Design
  20. 20. Recommendations for Strategy Formulation – Life & General <ul><li>This is an internet-based co-ordination point for purchase of agricultural produce and a forum for agricultural information and interaction, particularly for affluent farmers </li></ul><ul><li>The ‘sanchalak’, manning the interaction point, is trusted to provide reliable information/ advice and would have influence over the decision to purchase insurance and which company to use </li></ul>E-Choupal <ul><li>This institution is very highly trusted by the rural population with access to the smallest villages </li></ul>Post Office <ul><li>Banks are viewed as ‘safe’ institutions to invest in and any tie up would enhance the credibility of insurers and their agents </li></ul>Commercial/ Co-operative Grameen/ RRBs <ul><li>As Insurance customers rely on personal interactions and a high level of service, some degree of rural agent network is a must </li></ul>Agent Network Delivery Systems
  21. 21. Recommendations for Strategy Formulation - Life & General <ul><li>NGOs working in micro-finance with grass-root reach, trust and credibility can be used to access members of Self Help Groups who would then be more inclined to purchase from the private player </li></ul>NGOs <ul><li>Producers’ co-operative societies are rural forums for interaction/ information and finance for farmers. Regular meetings are held and can be used as a group platform to sell policies (specifically accident/ crop/ health policies) to members </li></ul>Producers Co operative Societies <ul><li>These are various rural forums that meet regularly at the village, block and district levels and can be used for promoting group insurance </li></ul><ul><li>Once the group leadership approves the insurance company, members will be more inclined to accept its insurance products </li></ul>Self Help Groups/ Youth Clubs/ Co-operative Societies Delivery Systems
  22. 22. Existing Definitions of ‘Rural’ IRDA Max. Pop.= 5000, pop density =< 400 per sq km, at least 75% male working pop engaged in agri activity RBI Locations with population upto 10,000 considered as rural branches Definitions Census Town: All places having a statutory municipal body that satisfy Min Pop=5000, * pop density >= 400 per sq km, * 75% male working pop engaged in non agri activity. All other locations are treated as rural
  23. 23. Definition of Rural for The Insurance Sector <ul><li>Considering factors like continuum of economic activity between rural and urban areas; major economic activity in rural to be agriculture; rural character of several towns even after being upgraded from village the following definition is recommended for rural: </li></ul><ul><li>All villages and/or rural towns with a population up to 10,000 meeting one or more of the following criteria should be treated as ‘rural”. </li></ul><ul><ul><li>Have branches of grameen bank/co-operative bank/rural branch of a Commercial bank </li></ul></ul><ul><ul><li>Have agri co-operatives </li></ul></ul><ul><ul><li>Having agriculture market (mandi) </li></ul></ul>
  24. 24. Thank You

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