Evaluation of micro

insurance in India
 Index
 Introduction.
 IRDA’s initiative in micro insurance.
 4P’s of micro insurance.
 5th P of micro insurance.
 SWOT Analysis.
 Niche creation.
 Critical success factor.
 Introduction.
 Micro-Insurance is a key element in the financial services
packages for people at the bottom of the pyramid.
Micro insurance is…
“…A mechanism to protect low-income people against specific perils
in exchange for regular premium payments proportionate to the
likelihood and cost of the risk involved”

Micro insurance is not…

• Small insurance companies.
• Just another product offered by MFIs.
• Regular insurance products with smaller sums insured and
premiums.
• Savings, credit, risk prevention.
 IRDA’s Initatives
 Developmental Initiatives:-
 Legislature delegated developmental responsibilities – A unique model.
 Ensuring orderly growth and penetration of insurance are the prime
objectives.
 Introduction of development oriented regulations to Bridge the Demand
Supply gap.

 Mandatory Norms :-
Rural Sector - Life Insurers
 First 5 years - 7% to 16% of total policies underwritten
 6th to 10th* year - 18% to 20%
Non Life
 First 5 years - 2% to 5% of total gross premium
 6th to 10th* year - 5% to 7%.
Social Sector - Life & Non Life
 5000 to 20000 lives for the first 5 years and 25000 to 55000 lives for 6th to
10th year*
 4 P’s
 Product: Credit Life, Endowment & Term Life, Personal,
Accidental, Property, Health, Agriculture Insurance.
Policies are simplified according to the market.

 Price: Very low priced products with lump sum, irregular &
frequent options to cover different risk structures.

 Place: Target audience resides in rural or semi urban India.

 Promotion: Sold by unlicensed, non traditional agents,

Banks (Co-operative, formal, rural), SGH’s, NGO, MFI, Post Office,
Internet, KIOSKS, Rural Knowledge center.
 PEOPLE
A Commercial Insurance for
wealthy individuals and
B companies, as well as
A
Wealthy compulsory products.
Middle
Income
B Most of non-motor related
commercial insurance.
C
C Social security and public
D E health services.
Low
Income
D Aggregate market for
microfinance providers.

Destitute / Severely Poor E Potential market for micro

Policyholders (the market):- insurance.
People do respond to “good” products.
Generally lack understanding of insurance and thus require
knowledge and appreciation .
Education, marketing, policy documents MUST be simple and
appropriate .
We need to help people link needs with insurance as an
 SWOT
 Strengths :
 Huge untapped market share
 Global push from UN & ILO
 Caters to CSR of organization

 Weakness :
 Mind share against saving
 Lack of infrastructure
 Cost of distribution & low penetration in rural & semi urban

“ Micro insurance has never been a part of thought

process, it has always been after thought”
 SWOT
 Opportunity :
 Emerging market
 Saturated urban market

 Government intervention

“ The pioneer will be the market leaders ”

 Threats :
 Moral hazards & Physical hazards
 Data base research not possible

 High investment & low return on investment

 NICHE creation
 Products : Designed as per the
requirement of market
 Price : Reasonable prices
 Place : Establish branches in rural area. Need
to tie up with more NGO & Social bodies.
 Promotion : Club with Govt. development
strategies
 People : Give training to local resourses for
creating awareness and emlopyment
 Critical success factors
 Simplification of products and bundling where requires
making them easy to understand, easy to use, sell and
service.
 Simplifying and making premium payment plans flexible to
suit farmer needs.
 Focus on volumes by targeting large groups.
 Integrating micro finance activities with micro insurance for
a most beneficial outcome.
 Claim settlement to be timely, simple and transparent.
 Maximizing the benefit of connectivity revolution in rural
India to reach the unserved markets.
 Using additional innovative distribution channels to achieve
cost-efficiency in agricultural markets.
THANK YOU