Micro Insurance

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Micro Insurance

  1. 1. Micro Insurance An Approach to Serve the Poor
  2. 2. <ul><li>Low – income groups are invariably exposed to innumerable risks. Micro insurance works on the phenomenon of risk transfer mechanism characterized by low premiums and low coverage limits. </li></ul>
  3. 3. Agenda… <ul><li>Introduction </li></ul><ul><li>Need for Micro Insurance </li></ul><ul><li>Scenario of Micro Insurance in India </li></ul><ul><li>Characteristics of Micro Insurance </li></ul><ul><li>Products </li></ul><ul><li>Opportunities </li></ul><ul><li>Challenges Ahead </li></ul><ul><li>Conclusion </li></ul>
  4. 4. Introduction <ul><li>Risk protection </li></ul><ul><li>Low premiums and low coverage limits </li></ul><ul><li>Contribution to economic and social inclusion </li></ul><ul><li>Insurance business growth </li></ul><ul><ul><li>94.96% in 2006-07 in comparison to 47.94% in 2005-06 </li></ul></ul><ul><li>4.10% for life insurance and 0.6% for non life insurance </li></ul><ul><li>58% of India’s 105.4 mn insured are from rural area </li></ul>
  5. 5. Need for Micro Insurance <ul><li>Low income household are predisposed </li></ul><ul><li>To protect themselves and their families against different risks </li></ul><ul><li>Poor need to be seen as a market </li></ul><ul><li>Developed countries and Developing countries </li></ul><ul><li>New concept for the bottom of pyramid </li></ul>
  6. 6. Scenario of Micro finance in India <ul><li>Acc. to UNDP – market is nearly 90% of the Indian population. </li></ul><ul><li>$2bn market </li></ul><ul><li>Potential market size 62,304.70 to 84,267.55 mn </li></ul><ul><li>Only 2% of the poor in country are covered </li></ul>
  7. 7. Characteristics of Micro Insurance <ul><li>Group insurance schemes </li></ul><ul><li>Women’s associations, saving and credit groups, cooperatives and the like </li></ul><ul><li>Flexible mode of premium payments </li></ul><ul><li>Distribution channel </li></ul>
  8. 8. Products <ul><li>Life micro insurance </li></ul><ul><ul><li>Covers not only the loan amount, also includes funerals benefits for the policyholder and family member sometimes </li></ul></ul><ul><li>Health micro insurance </li></ul><ul><ul><li>Coverage against till health and maternity for direct and indirect medical costs </li></ul></ul><ul><li>Disability micro insurance </li></ul><ul><ul><li>Linked with death cover in personal accident products </li></ul></ul><ul><li>Agriculture micro insurance </li></ul><ul><ul><li>Aims at protecting farmers from seasonal variability </li></ul></ul><ul><li>Composite Products </li></ul><ul><ul><li>Related to grouping of life, health and assets protections </li></ul></ul>
  9. 9. Opportunities <ul><li>Potential area growth and development by insurer and practitioners </li></ul><ul><li>New distribution channel </li></ul><ul><li>Self-employed </li></ul><ul><li>Public and private insurance player </li></ul>
  10. 10. Challenges <ul><li>Transaction cost </li></ul><ul><ul><li>High administrative cost </li></ul></ul><ul><li>Distribution systems </li></ul><ul><ul><li>Distribution systems of most insurers not designed to serve low income market </li></ul></ul><ul><li>Products </li></ul><ul><ul><li>Absences of exclusive products </li></ul></ul><ul><li>Regulatory Environment </li></ul><ul><ul><li>Require new regulatory environment </li></ul></ul><ul><li>Customer Education and Awareness </li></ul><ul><li>Reinsurance </li></ul><ul><ul><li>In order to minimize the risk </li></ul></ul><ul><li>Fraud </li></ul><ul><ul><li>Customer and channel partners </li></ul></ul>
  11. 11. Conclusion <ul><li>Poor no longer consider as non bankable </li></ul><ul><li>Subset of microfinance </li></ul><ul><li>Combination with savings and micro credit </li></ul>
  12. 12. Thank you… <ul><li>Akash k. sonkar </li></ul>

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