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

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BASIXEquity for Equity

Micro Insurance-Effective Renewal and Participation

Rate

Presentation by BASIX,15-Oct-05

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Contents

Introduction to BASIX

Insurance services at BASIX

Participation and Renewal in insurance

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Introduction to BASIX

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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)

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1.Deoghar25. Jamshedpur 26. Ranchi

21.Aska22.Berhampur23. Nayagarh

1.Adilabad2.Adoni3.Anantapur4.Bhadrachalm5.Bhainsa6.Hindupur7.Hyderabad (Urban Micro Finance)

1.Kadapa2.Khammam3.Madhira

1.Nalgonda2.Nandyal3.Nirmal4.Nizamabad5.Proddutur16. Ramayampet17. Siddipet18. Srikakulam19. Suryapet20. Vikarabad& KBS Bank (Mahabubnagar)

27.Jabalpur28. Shajapur& Indore

29.Bhandara30.Chandrapur31.Nanded32.Parbhani33.Umerkhed34. Wardha35.Yavatmal

36.Bellary &KBS Bank (Raichur, Gulbarga)

SNFL

Dausa & Daulpur

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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

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Insurance services at BASIX

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Addressing risks through

• Risk mitigation services like – preventive vaccination for livestock– integrated pest management (IPM) practices for

crops

• Risk management services

– Insurance– Derivatives

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Insurance-Products

Policies Avg Sum Insured

(Rs)Since As on

30-Sep-05

Lives under Group Policy

Oct-2002 1,30,000 15,000

Lives under: Retail Policies

Dec-2003 13,000 22,000

Health Insurance Customers

May-2005 64,000 36,500

Livestock Insured Oct-2002 13,000 8,000

Rainfall Ins

customers

June-2003 7,000 5000

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Insurance-Service Performanceas on 30-Sep-05

back

Claims Settled Settled amount

Rs

Life 307 40,00,000

Livestock 357 27,00,000

Health 6 9,000

Rainfall 305 4,50,000

Total 975 71,59,000

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Insurance Business Model

Insurer BASIX Rural Customer

Offer products Distribute Insurance

Feedback on needsInputs for products

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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

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Participation and Renewal in insurance

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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)

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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

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Educational program on Insurance

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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

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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

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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

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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.

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6. Communication

• Most promotional literature still happens in English

• Need for providing product literature, proposal forms and policy contract notes in different vernacular languages

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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

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Rainfall insurance claim settlements in Nov-04

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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

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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.

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Thank You

www.basixindia.com

[email protected]

Documents

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