TATA-AIG’s– Micro-insuranceto Rural

8/2/2019 TATA-AIGs Micro-insuranceto Rural

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TATA-AIGs Innovative Distribution Model

Extending Micro-insuranceto Rural India

Submitted by

Sumit Tembhare

MBA-RMA401310002

AMITY UNIVERSITY


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Micro-Insurance An Overview

Social protection systems for vulnerable people.

As a tool that would help to fill communityprotection gap.

Protection of low-income people against specificperils.

Low premium that suits the affordability.

New business model that provide sustainable

development.Specifically designed to cater to the needs of thepoor


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Micro-Insurance Distribution Models

Market based mechanism that promises tosupport sustainable livelihoods.

Poor reach because of lack of infrastructure and

cost consideration.Involvement of Public sector bank, MFIs andcommunity including SHGs.

Partners helps to promote marketing, premiumcollection & claims and provide requiredinfrastructure.


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TATA-AIG

First insurance company to introduce theconcept of micro-insurance in India.

Initially worked with MFIs using Partner-Agent

Model.Due to lack of godo MFIs TATA-AIG developedunique Micro-Agent Model

This model features special Rural Community

Insurance Groups (CRIGs). CRIGs are a partnership firm formed of fivewomen from a SHG.


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TATA-AIGs Micro-Agent Model

Micro-agent model works as follows:

TATA-AIG obtains recommendations from NGOs that have goodrelationships with the local community in an area targeted by TATA AIG.

NGO provides suggestions on members of the community who could begood agents for micro-insurance policies - the micro-agents.

If these micro-agents accept, they are then asked to form into groupsofpeers. The group, referred to in the TATA-AIG model as a CRIG (Community RuralInsurance Group), operates in a similar fashion to an insurance agents firm.

The agents are trained by TATA-AIG, which help for the CRIG leader to

obtain an agents licence.

The NGO may play additional roles such as aggregating the premiums,allowing the agents to use their offices to conduct business, paying thebenefits in public ceremonies and training the micro-agents.


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COMMUNITY

NGOS

CRIG

TATA-AIG

Stakeholderss in Micro-Agent Model


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Target Community

Socio-Economic & Geographic Profile of theTarget Clients

74% of Indian households from rural sector.

The annual household income of nearly 80% ofthese is less than US$1800 (Rs 81,000).

A typical rural household consisting of 5 or moresharing income and access to financial services.


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Target Community


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Impact of TATA-AIGs Model

The rural poor not only want insurance to be affordable, but also to protect

against high-frequency risks such as serious ill health, accidents, harvestfailure and fire. The capacity of households to cope with a shock depends inpart on risk source, correlation, frequency and intensity.The risks which are insurable are as follows:

Death: Most household members contribute to household income, except those tooold, young or infirm to work and their loss of life would drastically affect the householdearnings.

Critical illness: This affects the household earnings, labour and also increases theexpenses incurred due to the treatment of the illness.

Sickness: Decreases the number of productive hours and hence results in decrease inincome.

Old age: The elderly have very few income options. In addition to this, there is adecreasing trend of the younger generation taking care of the older one.

Risk of lowered agricultural productivity or returns because of failed monsoons andnatural disasters such as drought, floods, etc.


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KEY INSIGHTS Problems & Threats toSustainability

A major problem that TATA-AIG faces is in its expansionary plans inthe new rural markets in India. Even today there are largely two typesof people in rural India which pose a serious challenge to the providersof micro-insurance:

Those who have little or no knowledge about insurance.

Those who have had a negative exposure to insurance which haslead to a kind of prejudice amongst their minds.

All possible efforts should be directed towards improving upon theefficiency and effectiveness of the model so as to strengthen thedistribution channel which forms the heart and soul of the model and isresponsible for the huge success of the micro-agent model.


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Recommendations

Following practices should be made in micro

insurance-

Developing New Policies. Marketing micro-insurance .

Supporting Micro-Insurance Innovation .

Gender and Micro-Insurance.

Micro-Insurance Awareness .

Establishment of a Micro-Insurance Council.


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Submitted ToDr. Ritesh Dwivedi

Lec. Amity School Of Rural Management

THANK YOU

TATA-AIG’s– Micro-insuranceto Rural

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