Micro Insurance- Effective Renewal and Participation Rate

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

2. 2 Contents

3. 3

4. 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. 5

6. 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. 7

8. 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. 9 Insurance-Products

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

11. 11 Insurance Business Model

12. 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. 13

14. 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. 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. 16 Educational program on Insurance

17. 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. 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. 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. 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. 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. 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. 23 Rainfall insurance claim settlements in Nov-04

24. 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. 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. 26 Thank You www.basixindia.com gunaranjan@basixindia.com