70 an overview of micro insurance industries in india

INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY EDUCATIONAL RESEARCH
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VOLUME 4, ISSUE 6(1), JUNE 2015
AN OVERVIEW OF MICRO INSURANCE INDUSTRIES IN
INDIA
Dr. C. Paramasivan
Assistant Professor
Department of Commerce
Periyar E.V.R College (Autonomous)
Tiruchirappalli, Tamil Nadu
S. Rajaram
Ph.D Research Scholar
Department of Commerce
Periyar E.V.R College (Autonomous)
Tiruchirappalli, Tamil Nadu
Introduction
Micro insurance is one of the unique and important segments of
insurance which provides financial assistance to the poor people in the
country. Reaching the micro insurance to all is also a part of financial
inclusion. The IRDA on 30th
November 2005 regulation act micro
insurance products was implemented in India. The salient feature of
the life insurance, Health insurance, Crop insurance, Lives stock
insurance or cattle insurance and Asset insurance is product offer to
low income people. According to IRDA the term micro insurance
comprises two words “Micro” which means “Affordable to the poor”
and Insurance means “Risk Pooling to compensate to individual and
group”. Micro insurance is a key element in the financial services
package for mass people, particularly for economically weaker section of
people. The poor people face more risks than the well off, but more
importantly they are more vulnerable to the same risk. With this view
the present paper tries to discuss the distribution of micro insurance in
India.
Literature Review
Venkata Ramana Rao (2008) noted that micro insurance is not
an opportunity but a responsibility and to serve this responsibility good
awareness campaign is needed. Micro insurance is offering real
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solutions to the billions of rural poor that raises the awareness of micro
insurance as a key issue in coming future.
Ziaulhaq Mamum (2007) concluded that there are three basic
models of micro insurance which are provider model, insurer model and
linked model. As per the study, linked model is the best suitable model
for the improvement of poor’s conditions in Bangladesh, but presently
they are using insurer model, which is less productive for the poor’s
social security.
Anuradha Rajivan (2007) observed that planned actual steps to
address constraints like poverty will help express the insurability of the
poor in the future and study also shows that micro insurance is on the
edge of floating of India. The current interest from the different
stakeholders combined with the solid movement provided by the
November 2005 directive of IRDA concrete complementary catalytic
support will enable all the stakeholders to play a more proactive role.
Tinsy Rose Tome and Selvam (2012) concluded that there are
very few or no providers for health insurance. So the providers should
concentrate more on providing health insurance products. The poor
people and mostly the illiterate providers can join with the corporate
because they are still not ready to give importance to the rural market.
There is a need of well laid out strategy to target rural market at
corporate level and more importantly human angle should not be
handled by experts.
Ratna Kishore (2013) in his article pointed out that the market
for micro insurance in India is enormous and remains untapped. The
potential market size for micro insurance in India is estimated to be
between Rs.62000 and Rs.84000 million. He has given a micro
insurance business model for the existing insurance. He explains micro
insurance as social security lower for the poor and brought out the
problems and challenges in micro insurance.
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Statement of Problem
Micro insurance nature products in the market have short policy
contract terms and are tremendously but no longer exclusively under
written on a group basis. A number of the new products offered by
formal insurers may be individually underwritten but the numbers of
such policies are still very small even relative to the low overall
outreach micro insurance. It is one of the emerging concepts in India
which consists of the public sector players and private sector players;
government alone may not fulfil all demands of the rural people. In
India 22 private players and one public insurance player provides
various kind of insurance product offers to rural people. Life Insurance
Corporation as well as private insurance player two major parts of
classified; there are life insurance and non life insurance. Rural people
avoid the risk coverage to transfer the risk of the rural people covered
with life secured policy. They pay low premium to the policy holder.
Individual category and group category people avoid the risk coverage
because they are stating some business and are not aware of risk limit
so they have taken this micro insurance policy. Hence there is a need
to understand the concept of micro insurance and its distribution with
respect to region wise, category wise and product wise during study
period.
Objective
To examine an overview of micro insurance industries in India
Methodology
The present paper is quantitative in nature by using secondary
data which have been collected from the report of IRDA, website of
insurance agencies etc. Collected data have been arranged according to
its needs and analysis with the help of simple percentage
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Table No: 1
Region wise distribution of offices of life Insurance 2010-11
Insurer Metro Urban Semi-
urban
Others Company
Total
Percentage
Aegon
Religare
32 66 27 3 128 1.10
Aviva 28 45 56 13 142 1.22
Bajaj Allianz 64 149 438 441 1092 9.45
Bhart AXA 26 60 86 9 181 2.50
Birala
Sunlife
54 89 370 104 617 5.34
CanaraHSBC 10 17 6 - 33 0.28
DLF
Pramerica
6 11 23 1 41 0.35
Future
Generali
12 49 66 58 185 2.00
HDFC
Standard
59 83 285 71 498 4.31
ICICI
Prudential
79 114 494 715 1402 12.14
IDBI Federal 12 30 17 1 60 0.51
India first 8 5 - - 13 0.11
ING vysya 22 57 153 15 247 0.02
Kotak
Mahindra
38 64 92 9 203 2.50
Max New
York
72 99 227 106 504 4.36
Met Life 30 61 145 34 270 2.33
Relience life 90 120 570 468 1248 11.00
Sahara 6 35 73 21 135 0.01
SBI Life 34 124 334 137 629 6.40
Shriram 25 49 85 3 162 1.40
Star Union
Dai-ichi
7 14 - 1 22 0.19
Tata AIG 55 87 168 53 363 3.14
LIC 363 560 953 1495 3371 29.19
Industry
Total
1132 1988 4668 3758 11546 100
(Source: IRDA- Annual Report 2012-13)
Table No: 1 shows the region wise distribution of offices of life
insurance 2010-11 as per the IRDA annual report.
As regards Aegon Religare, there are 128 offices which
constitute 1.10 percentage of total Life insurance office, of which 32 are
in metro, 66 in urban, 27 in semi urban and 3 in other places. As
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regards Aviva there are 142 offices which constitute 1.22 percent of
total life insurance offices of which, 28 are in metro, 45 in urban, 56 in
semi urban and 13 in other places. As regards Bajaj Allianz there are
1092 offices which constitute 9.45 percent of total life insurance offices
of which 64 are in metro, 149 in urban, 438 in semi urban and 441 in
other places. With regards to Bhart AXA there are 181 offices which
constitute 2.50 percent of total life insurance offices of which 26 are in
metro, 60 in urban, 86 in semi urban and 9 in other places. As regards
Birala sunlife there are 617 offices which constitute 5.34 percent of life
insurance of which 54 are in metro, 89 in urban, 370 in semi urban and
104 in other places. With regards to Canara HSBC there are 33 offices
which constitute 0.28 percent of total life insurance offices of which 10
are in metro, 17 in urban and 6 in semi urban areas. As regards DLF
Pramerica there are 41 offices which constitute 0.35 percent of life
insurance offices of which 6 are in metro, 11 in urban, 23 in semi urban
and one in other place. With regard to Future Generali there are 185
offices which constitute 2.00 percent of life insurance offices of which
12 are in metro, 49 in urban, 66 in semi urban and 58 in other places.
As regards HDFC standard there are 498 offices which constitute 4.31
percentage of life insurance of which 59 are in metro, 83 in urban, 285
in semi urban and 71 in other places, With regard to ICICI Prudential
there are 1402 offices which constitute 12.14 percentage of life
insurance of which 79 are in metro, 114 in urban, 494 in semi urban
and 715 in other places. As regards IDBI Federal there are 60 offices
which constitute 0.51 percentage of life insurance of which 12 are in
metro, 30 in urban, 17 in semi urban and one in other places. With
regard to India first there are 13 offices which constitute 0.11
percentage of life insurance of which 8 are in metro and 5 in urban
places. As regards ING vysya there are 60 offices which constitute 0.51
percentage of life insurance of which 12 are in metro, 30 in urban, 17 in
semi urban and one in other places. With regard to Kotak Mahindra
there are 203 offices which constitute 2.50 percent of life insurance of
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which 38 are in metro, 64 in urban, 92 in semi urban and 9 in other
places. With regard to Max New York there are 504 offices which
constitute 4.36 percent of life insurance of which 72 are in metro, 99 in
urban, 227 in semi urban and 106 others places. With regard to Met
Life there are 270 offices which constitute 2.33 percentage of life
insurance of which 30 are in metro, 61 in urban, 145 in semi urban and
34 in other places. As regards Reliance life there are 1248 offices which
constitute 11.00 percentage of life insurance of which 90 are in metro,
120 in urban, 570 in semi urban and 468 in other places, Sahara there
are 135 offices which constitute 0.01 percentage of life insurance of
which 6 are in metro, 35 in urban, 73 in semi urban and 21 in other
places. For are SBI Life there are 629 offices which constitute 6.40
percentage of life insurance of which 34 are in metro, 124 in urban, 334
in semi urban and 137 in other places. For Shriram there are 162
offices which constitute 1.40 percentage of life insurance of which 25
are in metro, 49 in urban, 85 in semi urban and 3 in other places. With
regard to Star Union Dai-ichi there are 22 offices which constitute 0.19
percentage of life insurance of which 7 are in metro, 14 are in urban
and one in other places. As regards TATA AIG there are 363 offices
which constitute 3.14 percentage of life insurance of which 55 are in
metro, 87 in urban, 168 in semi urban and 53 in other places, With
regards to LIC there are 3371 offices which constitute 29.19 percentage
of life insurance of which 363 are in metro, 560 in urban, 953 in semi
urban and 1495 in other places On the whole, there are 11546 offices of
life insurance on 2010-11 of which 1132 are in metro,1988 in urban,
4668 in semi urban and 3758 in other areas.
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Table No: 2
Individual category of micro insurance products
Company
Name
Name of Product Date of
Launch
Aviva Gramin Suraksha 12 June 2007
Bajaj Allianz Bajaj Allianz Saral Suraksha 4th
April 3007
Bajaj Allianz Jana vikas Yojana
Bajaj Allianz Alp Nivesh Yojana
Birla Sunlife Bima Dhan Sachay and Bima
Suraksha Super
31st
August
2007
DLF
Pramerica
DLF Pramerica Sarva Suraksha 30th
March 2009
Edelweiss
Tokio
Raksha Kavach Dhan 29th
Octorber
2012
Nivesh Bima Yojana 20th
December
2012
HDFC
Standard
Gramin Bima Kalyan Yojana
Sarvagraman Bachat Yojana
24th
January
2011
ICICI
Prudential
Sarva Jana Suraksha 15th
July 2008
PNB Met
Life
Met Vishwas 15th
July 2008
Met Grameen Ashray 29th
July 2010
Sahara Sahara Sahyog 26th
June 2006
SBI Life Grameen Bima 15th
Feburary
2013
Tata AIG Tata AIG Life Ayushman Yojana
Tata AIG Life Navkalyan Yojana
Tata AIG Life Sampoon Bima Yojana
8th
August
Tata AIG Sumangal Bima Yojana 2nd
Septemebr
2008
(Source: IRDA Annual Report 2012-13)
The above table reveals the details of the insurance products offered by
the company and date of its launching.
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As regards individual category of micro insurance products,
Aviva introduced a micro insurance product in the name of Gramin
Suraksha on 12th
June 2007. Bajaj Allianz introduced a micro insurance
in the name of Bajaj Allianz Saral Suraksha Yojana Bajaj Allianz Jana
vikas Yojana, Bajaj Allianz Alp Nivesh Yojana on 4th
April 2007. Birla
Sunlife introduced a micro insurance in the name of Bima dhan Sachay
and Bima suraksha Super on 31st
August 2007 and DLF Pramerica DLF
Pramerica Sarva Suraksha on 29th
October 2012. Edelweiss Tokio
introduced a micro insurance in the name of Raksha Kavach Dhan and
Nivesh Bima Yojana on 20th
December 2012. HDFC standard
introduced a micro insurance in the name of Gramin Bima Kalyan
Yojana and Sarvagraman Bachat Yojana on 24th
January 2001. ICICI
Prudential introduced a micro insurance in the name of Sarva Jana
Suraksha on 15 July 2008. PNB Met Life introduced a micro insurance
in the name of Met Vishwas and Met Grameen Ashray on 29th
July
2010. Sahara introduced a micro insurance in the name of Sahara
Sahyog on 26th
June 2006. SBI Life introduced a micro insurance in the
name of Grameen Bima on 15th
Feburary 2013. Tata AIG introduced a
micro insurance in the name of Tata AIG Life Ayushman Yojana, Tata
AIG Life Navkalyan Yojana, Tata AIG Life Sampoon Bima Yojana on
8th
August 2008 and Tata AIG Life Sumangal Bima Yojana on 2nd
September 2008.
Table No: 3
Group category of micro insurance products
Company
Name
Name of Product Date of Lauch
Aviva Credit Plus 6th
Aug 2002
Canara
HSBCOBSC
Sampooma Kavach Plan 15th
January
2009
DLF Pramerica Sarva Suraksha 30th
March 2009
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IDBI Federal Group Micro Insurance Plan 16th
December
2008
ING Vysya Generic Group term
insurance for social sector
27th
March 2002
ING Saral Suraksha 30th
November
2007
SBI Life Grameen Shakti 6th
December
2007
Grameen Super Suraksha
Shriram Shri Sahay –SP 19th
Mar 2007
Shri Sahay-AP 15th
May 2007
Star Union SUD Life Paraspar
Suraksha Plan
17th
May 2009
(Source: IRDA Annual Report 2012-13)
As regards Group category of Micro insurance products details,
Aviva introduced group micro insurance in the name of Credit Plus on
6th
August 2002. Canara HSBCOBSC introduced group micro insurance
in the name of Sampooma Kavach Plan on 15th
January 2009. DLF
Pramerica group insurance introduced Sarva Suraksha on 30th
March
2009. IDBI Federal introduced group insurance in the name of Group
insurance plan 16th
December 2008. ING vysya introduced group
insurance in the name of Generic group term insurance for social sector
on 27th march 2002, and ING saral Suraksha on 30th
November 2007.
SBI Life introduced group insurance in the name of Grameen Shakti
and Grameen super suraksha on 6th
December 2007. Shri Sahay-SP on
19th
March 2007 and Shri Sahay- AP on 15th
may 2007.Star Union
introduced group insurance on SUD Life Paraspar Surksha plan on 17th
may 2009.
Micro insurance of Individual category
It is distribution in rural areas coupled with availability of
simple, standard product with low flexible premium that is one of the
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major reasons for a very low insurance presence and penetration in
rural areas. This announcement will go a long way in addressing this
difficulty of higher distribution cost. Micro insurance policies have an
insurance cover ranging from Rs 5000 to Rs 50000 and cover health,
dwelling, personal accidents in general insurance and term,
endowment, health and accident under life insurance. Micro-
insurance policies, because of flexibility of premium payment terms,
amount and coverage, cater to families in the informal sector who are
in need of insurance and can’t afford higher premium in one go. These
banking correspondents will be permitted to take up selling of ‘micro
insurance’ policies.
Table No: 4
New business under micro insurance portfolio (Life Insurance)
2010-211
(Source: Handbook on Indian Insurance Statistics 2010-11)
As regards the individual category of new business under micro
insurance portfolio on 2010-11, there are 11222 policies mobilised by
Insurer Individual Category
Number
of policies
Percentage Premium
Crore
Percentage
2010-2011 2010-2011
Aviva 11222 0.30 58.87 0.45
Birla
Sunlife
290395 7.95 186.00 1.42
ICCI
Prudential
324889 8.98 256.08 1.96
Met Life 3501 0.09 4.21 0.03
Sahara 1483 0.04 12.24 0.09
Tata AIG 68243 1.86 217.69 1.66
LIC 2951235 80.83 12305.76 94.36
Industry
Total
3650968 100 13040.85 100
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Aviva which constitute 0.30 % of the total number of policies. Aviva
mobilised premium amounted to Rs. 58.87 (0.45%), which constitutes
290395 policies mobilised Birla Sunlife constitutes 7.95% of the total
number of policies. Birla Sunlife mobilised premium amounted to
Rs.186 (1.96%), There are 324889 policies mobilised by ICICI
Prudential which constitutes 8.90% of the total number of policies.
ICICI mobilized premium amounted to Rs.256.08 to (1.96 %), there are
3501 policies mobilized by Met life which constitutes 0.09% of the total
number of policies. Met Life mobilized premium amounted to Rs. 4.21
(0.03%; There are 1483 policies mobilized by sahara which constitutes
0.04%, Sahara mobilized premium amounting to Rs. 12.24 (0.09%).
There are 68243 policies mobilised by Tata AIG which constitute 1.86
percentage of the total number of policies. Tata AIG mobilized
premium amounting to Rs.217.69 (1.66%) and there are 2951235
policies mobilised by life insurance corporation which constitutes
80.83% of total number of policies. Life insurance corporation mobilized
premium amounting to Rs.12305.76 (94.36%).
Group category of micro insurance
There are a large number of groups which are non-employer-
employee, are homogeneous in nature and have a commonality of
interest. These groups represent a particular profession trade such as
domestic workers, auto drivers and taxi drivers association, Anganwadi
workers, Self help groups (SHGs) and cooperative societies. Such
groups are in fact more deserving for a group based insurance product.
The inclusion of these groups under the group insurance products will
help hitherto uncovered members of these groups to have an insurance
as well as saving cover, will help mobilize their savings and will help
increase insurance penetration immensely. These members could not
afford an individual insurance product owing to the higher premium
and will now be able to avail a better customized product at a much
lower premium.
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Table No: 5
New business under micro insurance portfolio (Life Insurance)
2010-211
(Source: Handbook on Indian Insurance Statistics2010-11)
As regards the group category of new business under micro
insurance portfolio on 2010-11, there is one scheme by Aviva which
constitutes 0.00 % of the total number of schemes. Aviva mobilized
premium amounted to 1118.30 Crores (7.20%). There are 10010
schemes by DLF pramerica which constitutes 0.06% of the total
number of schemes. DLF prameica mobilized premium amounted to
1.00 (0.00%) There are 648835 schemes by IDBI Federal which
constitutes 4.51% of the total number of schemes. IDBI Federal
constitutes 1.14% of the total number of schemes. There are 69
schemes by sahara which constitutes 0.00% of the total number of
schemes. There are 70683 schemes by SBI Life which constitutes 0.04%
of the total number of schemes. SBI Life mobilized premium amounted
to 78.23 (2.21%). There are 357563 Schemes by Shriram which
constitutes 2.48% of total number of schemes. Shriram mobilized
premium amounted to 343.20 (2.21%). There are 13275464 schemes by
Insurer Group Category
Number of
Schemes
Percentage Premium
(Crore)
Percentage
2010-11 2010-11
Aviva 1 0.00 1118.30 7.20
DLF
Prameica
10010 0.06 1.00 0.00
IDBI
Federal
648835 4.51 178.41 1.14
Sahara 69 0.00 - -
SBI Life 70683 0.04 78.23 0.50
Shriram 357563 2.48 343.20 2.21
LIC 13275464 92.43 13803.67 88.92
Industry
Total
14362625 100 15523.08 100
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Life insurance corporation which constitutes 92.43% of total number of
schemes. Life insurance corporation mobilized premium amounted to
13803.67 (88.92%) of new business under micro insurance portfolio.
Role on micro insurance agent
A micro insurance agent can tie-up with only one life insurance
and general insurance company. In addition, micro insurance agent can
work with an agriculture insurance company and a standalone health
insurance company to distribute crop insurance and health insurance
products respectively. Micro insurance agents can tie-up with other
insurance companies only after three months from the date of
resignation from previous company. These agents have to undergo
training for at least 50 hours. IRDA has said that non-life insurers will
have to train these agents in local vernacular language. The cost will be
borne by the companies..
Table No: 6
Company wise number of micro insurance agents 2010-11
Company
Name
2011 2010 2009 2008
No % No % No % No %
Aviva 1 0.00 1 0.00 1 0.00 0 0.00
Bajaj
Allianz
210 2.00 210 2.42 193 2.66 168 3.66
Birla
Sunlife
33 0.31 129 1.48 104 1.43 77 1.67
ICICI
Federal
47 0.44 14 0.16 14 0.19 0 0.00
Met Life 9 0.08 0 0.00 0 0.00 0 0.00
Sahara 15 0.14 15 0.17 13 0.17 8 0.17
Shriram 0 0.00 1 0.00 1 0.00 1 0.00
TATA
AIG
443 4.22 400 4.61 277 3.82 164 3.57
LIC 9724 92.76 7906 91.12 6647 91.68 4166 90.88
Industry
Total
10482 100 8676 100 7250 100 4584 100
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(Source: IRDA-Annual Report 2012-13)
With respect to the company wise number of micro insurance
agent, LIC dominated with 9724 micro insurance agents in the year
2011, which constitutes 92.76% of total number of micro insurance
agents followed by Tata AIG with 443 (4.22%) of micro insurance
agents, Bajaj Allianz with 210 (2.00%)of micro insurance agents, Birla
sunlife with 33 (0.31%) of micro insurance agents, ICICI Federal with
47 (0.44%) of micro insurance agents. Met Life Insurance with 9
(0.08%) and sahara with 15 (0.14%) of micro insurance agents. With
regard to worked micro insurance company, micro insurance agents, in
the year 2010, constitutes 91.12% of total number of micro insurance
agents, Tata AIG with 400 (4.61%) of total number of micro insurance
agents, Sahara with 15 (0.17%) total number of micro insurance agents,
ICICI Federal 14 (0.16%), Birla sunlife with 129 (1.48%), Bajaj Allianz
with 210 (2.42%). In this year 2009 micro insurance agents LIC
dominated with 6647 (91.68%), Tata AIG with 277 (3.82%), Bajaj
Allianz with 193 (2.66%), Birla sunlife with 104 (1.43%), ICICI Federal
with 14 (0.19%), Sahara with 13 (0.17%) and in this year 2008 micro
insurance agents, LIC dominated with 4166 (90.88%), Bajaj Allianz
with 168 (3.66%), Tata AIG with 164 (3.57%) Birla sunlife with 77
(1.67%), Sahara with 8 (0.17%) of micro insurance agents worked for
public and private insurance company.
Conclusion
Micro insurance is part of financial inclusion which provides
financial services to the poor and the unreached people in the country.
Micro insurance consists of wide scope and it will reach huge segment
of the people. In India, micro insurances are not much popular like the
life and general insurance because of the lack of awareness among the
people. Hence, there should be a awareness on micro insurance among
the people particularly those who belong to weaker section of the
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society. With this View, the NDA government has implemented a
micro insurance linked PMJDY scheme. It will reach the target group
of the micro insurance products.
Reference
1. Anuradha Rajiven (2007), “Building security for poor- Potential and
prospects for micro insurance in India” Human development report
unit, UNDP regional Centre in Colombo, Serving Asia and the
Pacific
2. IRDA (2005), Insurance regulatory and development authority
obligations of insurers to rural social sector.
3. IRDA Annual Report 2010-2011
4. Paramasivan.C and Ganeshkumar.V (2013), “Overview of Financial
Inclusion in India”, International Journal of Management &
Development Studies,vol. No.2, pp 45-49.
5. Ratna Kishor,(2013) “Micro insurance in India-Protecting the
poor”, Journal of Business Management and Social Sciencess
Research, Vol.2,No.3. pp. 39-44
6. Venkataramana Rao (2008), “Life insurance awareness in rural
India: Micro insurance awareness in rural India: Micro insurance
lessons to learn and teach” Bimaquest- volume VIII issue I
7. Ziaulhaq Mamum,(2007),“Contribution of micro insurance
augmenting the poverty alleviation role of micro –finance: A case
study of Bangladesh” Institute of business administration
university of Dhaka, Bangladesh.
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