FICCI

STRATEGIES FOR SUCCESSIN THE RURAL INSURANCE MARKET: 

STRATEGIES FOR SUCCESS IN THE RURAL INSURANCE MARKET

CASE STUDY IN LUDHIANA : 

CASE STUDY IN LUDHIANA IFFCO-TOKIO General Insurance Co. Ltd. commissioned ORG-MARG to study the market for general insurance in rural Ludhiana

PERSPECTIVE : 

PERSPECTIVE Rural India a significant proportion of the population Low focus area for GIC and subsidiaries - therefore low penetration For IFFCO-TOKIO however... IFFCO has an established brand equity and a network of 90,000 co-operatives in rural India + TOKIO Marine Insurance, one of the largest general insurance companies in the world. Best poised to enter the rural market

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OBJECTIVES Before launching , the need to understand : Need Product Place Price Promotion Package

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RESEARCH APPROACH Two step research approach to ensure quality and richness of data Stage 1: Exploratory Qualitative Research To gain rich understanding of the needs, motivators and barriers for buying insurance Stage 2: Quantitative Research The quantitative phase measured acceptability and feasibility of the possible concept packages that emerged in the qualitative phase

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RESEARCH METHODOLOGY- WHO DID WE MEET? Men Financial decision makers of the household Women As influencers in the financial decision making Different life stages 25-35 years 40-55 years Income generating asset owners Land, Cattle, Tractor owners etc. Non- Income generating asset owners Landless working as employees

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RESEARCH TECHNIQUE- QUALITATIVE FOCUS GROUP DISCUSSIONS Especially recruited people, according to predetermined set of criteria, exchange experiences, attitudes and beliefs about a particular product category under guidance of trained moderator The advantages are : Group environment is less intimidating One person’s experiences or feelings sparks off another’s Spontaneity of response encouraged in a group situation

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RESEARCH TECHNIQUE- QUALITATIVE FOCUS GROUP DISCUSSIONS (Contd.) Highlights the the differences between consumers , making it possible to understand a range of attitudes and behaviour in a relatively short time Groups can be observed. This is useful for creative/marketing development team who can experience consumer vocabulary, attitudes and reactions, first hand Social and Cultural influences on attitudes and behaviour are highlighted

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RESEARCH TECHNIQUE- QUALITATIVE INDIVIDUAL DEPTH INTERVIEWS This is orientated towards penetrating below the question answer format of questionnaires that can later be used in Quantitative The advantages are : Longitudinal information can be gathered from one respondent at a time Minority and majority opinion can be tapped irrespective of dominance of personalities or problems of group processes

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RESEARCH TECHNIQUE- QUALITATIVE INDIVIDUAL DEPTH INTERVIEWS (contd) Supplements group discussion data Peer group pressure not operational Interviewing expertise can overcome tendency to express socially acceptable norms of attitude and behaviour Sample can be segmented to spread and to cover more than is usually possible /practical in a group interview research design

RESEARCH TECHNIQUE-QUANTITATIVE: 

SAMPLING In our Qualitative study, we found that each village has 3-4 pattis (communal sectors) We selected a starting point in each patti and conducted 4-5 random interviews within each patti FACE TO FACE INTERVIEWS Conducted using a structured questionnaire which emerged from inputs from the qualitative findings RESEARCH TECHNIQUE-QUANTITATIVE

FINDINGS FROM THE STUDY: 

FINDINGS FROM THE STUDY

WHERE IS INSURANCE IN THE LIVES OF THE RURAL INDIAN POPULACE: 

WHERE IS INSURANCE IN THE LIVES OF THE RURAL INDIAN POPULACE Life Insurance Very high awareness levels General Insurance Awareness levels and depth of knowledge varies across general insurance products ....high for insurance related to tractor, cattle and vehicles ....low for all other insurance products

CONSUMER PERCEPTIONS: 

CONSUMER PERCEPTIONS Life Insurance Synonymous to long term saving plan Tangible & definite benefit seen at the end of tenure Pushed aggressively by agents

CONSUMER PERCEPTIONS: 

CONSUMER PERCEPTIONS General Insurance An unnecessary expense No long term benefit perceived as no money back scheme in case of no claim Lack of sufficient push and effort from the channel due to Lack of attractive commission for agents Results in tendency to lapse inspite of initial subscription

PENETRATION OF GENERAL INSURANCE: 

PENETRATION OF GENERAL INSURANCE Higher penetration of insurance for products like tractors and cattle, taken on bank loans, as insurance is a prerequisite Vehicle insurance penetration on account of mandatory public liability insurance Poor penetration for all other general insurance products

MOTIVATORS: 

MOTIVATORS High concern levels across groups ...... insurance is synonymous with security “Inadequately serviced market with high potential” Mandatory Insurance .......prerequisite for bank loans .......public liability insurance for vehicles

BARRIERS : 

BARRIERS Poor comprehension of insurance in terms of the key benefit and the process – what / why / how it works No push ......sheer lack of promotion, education and information Weak distribution channel .......inaccessibility of the agent Processes cumbersome Stoic belief in fate coupled with apathetic attitude Therefore tendency to not purchase / renew

THEREFORE, SOME STRATEGIES FOR SUCCESS : 

THEREFORE, SOME STRATEGIES FOR SUCCESS

STRATEGIES FOR SUCCESS: 

STRATEGIES FOR SUCCESS Heighten need for insurance Education on benefits of general insurance ….. though not a saving but a risk cover in case of adversities “a lifeline in times of adversity” Ease of process - Subscription - Renewal - Claim settlement

STRATEGIES FOR SUCCESS: 

STRATEGIES FOR SUCCESS Product : Need to promote agriculture pump set and cattle insurance among owners Also need to promote health and personal accident policies, low awareness but high concerns Existing owners and lapsers of General Insurance would be an easier target

STRATEGIES FOR SUCCESS: 

STRATEGIES FOR SUCCESS Price : Lower premiums would be preferable, even by the richer states like Punjab Place : Preferred channels are Banks, Co-operatives & Sarpanch Promotion : Participative information dissemination “through small cohesive groups at farmer meets, melas, co-operative society meets….”

STRATEGIES FOR SUCCESS: 

STRATEGIES FOR SUCCESS Leverage current perceptions of ITGI as a trustworthy organisation and exploit the USPs of accessibility and wide network of ITGI & its channels fully For vehicle loans – tie ups with companies to insure while selling the vehicle Tie with banks and co-operative societies to sell general insurance policies

THE ROAD AHEAD...: 

THE ROAD AHEAD...

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SANKAT HARAN BIMA YOJANA The Sankat Haran Policy launched by ITGI on 30th September, 2001 The largest policy ever! Proposed to cover 5.5 crore farmers across the country Would increase visibility, familiarity and accessibility of insurance

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SANKAT HARAN BIMA YOJANA “Compensation” for a sum insured of Rs.4000/- per 50kg of Fertiliser bag in the event of Death or permanent total disablement Maximum Rs.1Lacs Sum Insured for one farmer irrespective of number of bags purchased Policy will be effective for 12months : date of cash memo Cash Receipt / Debit Memo will serve as the Insurance Cover

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The accidental bodily injury solely and directly caused by external, violent and visible cause. Example:- Motor / Tractor Accident whilst driving or travelling Drowning Snake bite Gas Cylinder Explosion / Burning Poisoning Accident out of the use of any machine THE TERM ACCIDENT MEANS

FINALLY TO FACILITATE EASE OF ADMINISTRATION AND OPERATION: 

FINALLY TO FACILITATE EASE OF ADMINISTRATION AND OPERATION

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FLOW OF CLAIM DOCUMENTS Claim papers from claimants Claim Cheque

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THANK YOU