UNIVERSITY OF MUMBAI

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS

BACHELOR OF MANAGEMENT STUDIES

2009-2010

SEMESTER V

TITLE OF THE PROJECT:

SUBMITTED BY:

UNDER THE GUIDANCE OF:

 DECEMBER 2009

DECLARATION

I, RAKESH KUMAR SAINI OF USHA PRAVIN GANDHI COLLEGE

OF MANAGEMENT, VILE PARLE (W) OF T.Y.BMS (SEM V) HAS

COMPLETED THE PROJECT ON “MICRO INSURANCE ” IN THE

ACADEMIC YEAR 2009-2010 AS PARTIAL COMPLETION OF THE

COURSE.

THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO

THE BEST OF MY KNOWLEDGE.

Date: Signature of the Student

Place: Mumbai
CERTIFICATE

I, PROF. BHATIA , HEREBY CERTIFY THAT MR. RAKESH KUMAR

SAINI OF SYDENHAM COLLEGE OF COMMERECE & ECONOMICS,

CHURCHGATE OF T.Y.BMS (SEM V) HAS COMPLETED THE

PROJECT ON “MICRO INSURANCE ” IN THE ACADEMIC YEAR 2009-

2010 AS PARTIAL COMPLETION OF THE COURSE.

THE INFORMATION SUBMITTED IS TRUE AND

ORIGINAL TO THE BEST OF MY KNOWLEDGE.

__________________
SIGNATURE OF
PROJECT GUIDE

__________________
SIGNATURE OF
COURSE CO-ORDINATOR
ACKNOWLEDGEMENT
 PREFACE
Micro-insurance is a key element in the financial services package for
people at the bottom of the pyramid. The poor face more risks than the
well off. It is becoming increasingly clear that micro-insurance needs a
further push and guidance from the Regulator as well as the
Government. The Committee concurs with the view that offering micro
credit without micro-insurance is self-defeating. There is, therefore, a
need to emphasize linking of micro credit with micro-insurance.
The country has moved on to a higher growth trajectory. To sustain and
accelerate the growth momentum, we have to ensure increased
participation of the economically weak segments of population in the
process of economic growth. Financial inclusion of hitherto excluded
segments of population is a critical part of this process of inclusion. We
hope that the recommendations made in this Report, if implemented,
will accelerate the process of financial inclusion
 EXECUTIVE SUMMARY

Poor people are especially vulnerable to risks related to health, income

generation, old age and death. This paper explores how micro insurance
could be designed and delivered to help them manage those risks and
contribute to poverty alleviation.
Micro insurance refers to the protection of low-income people against
specific perils in exchange for regular premium payments proportionate
to the likelihood and cost of the risk involved
The main message of this paper is micro insurance is an effective
approach for better health. Micro insurance refers to protection of
assets and lives against insurable risks of low income people through
formal, semi-formal and informal institutions. I t embrace government
run universal health insurance schemes, as well those run by
community groups, NGOs, and trusts.
This paper views the poor not as object of charity, but as an untapped
market which is seeking products and services that is being denied due
to inefficient public health services, low penetration of private
insurance, and market disconnect between demand and supply, and
affordability. After reviewing the lessons on micro insurance for health
from India and abroad, it advocates for a community based health
insurance scheme to be operated under the stewardship of the State,
funded by premiums, State budgetary support, and international aid. It
outlines a five-step process for a broad-based, state-wide insurance
scheme. The steps visualizes a consortium of interested parties
preparing a scheme design appropriate for poor people , preparation of
a business plan, initiation of a pilot scheme to support wider coverage,
initiating concerted marketing and community mobilization, strategic
purchasing from hospitals and health care providers, and instituting a
sound monitoring and evaluation mechanism to track progress of
implementation of pro-poor health insurance. Health insurance is
needed by both those living below poverty line and those above it.
Insurance coverage could be gradually extended to a wider population.
Pluralistic and innovative approaches are needed to reach out to
members of cooperatives, SHGs, registered medical practitioners,
school and college students, unemployed youth, and other sections of the
population.
INDEX
 INTRODUCTION

Insurance is fast emerging as an important strategy even for the low-income

people engaged in wide variety of income generation activities, and who remain exposed
to variety of risks mainly because of absence of cost-effective risk hedging instruments.
Micro-insurance, the term used to refer to insurance to the low-income people, is
different from insurance in general as it is a low value product (involving modest
premium and benefit package) which requires different design and distribution strategies
such as premium based on community risk rating (as opposed to individual risk rating),
active involvement of an intermediate agency representing the target community and so
forth.

Although the type of risks faced by the poor such as that of death, illness, injury and
accident, are no different from those faced by others, they are more vulnerable to such
risks because of their economic circumstances. Indeed, enhancing the ability of the poor
to deal with various risks is increasingly being considered integral to any poverty
reduction strategy

In the past insurance as a prepaid risk-managing instrument was never

considered as an option for the poor. The poor were considered too poor to be able to
afford insurance premiums. So, "the building up of a social safety net for especially poor
population groups is also a very important instrument for reducing world poverty”. Often
they were considered uninsurable, given

the wide variety of risks they face. However, recent developments in India, as elsewhere,
have shown that not only can the poor make small periodic
Contributions that can go towards insuring them against risks, but also that the risks they
face (such as those of illness, accident and injury, life, loss of property etc.) are eminently
insurable as these risks are mostly independent or idiosyncratic. Moreover, there are cost-
effective ways of extending insurance to them. Thus, insurance is fast emerging as a
prepaid financing option for the risks facing the poor.

What is insurance
Insurance in its basic form is defined as “ A contract between two parties whereby one
party called insurer undertakes in exchange for a fixed sum called premiums, to pay the
other party called insured a fixed amount of money on the happening of a certain event."
In simple terms it is a contract between the person who buys Insurance and an
Insurance company who sold the Policy. By entering into contract the Insurance
Company agrees to pay the Policy holder or his family members a predetermined sum of
money in case of any unfortunate event for a predetermined fixed sum payable which is
in normal term called Insurance Premiums.

Insurance is basically a protection against a financial loss which can arise on the
happening of an unexpected event. Insurance companies collect premiums to provide for
this protection. By paying a very small sum of money a person can safeguard himself and
his family financially from an unfortunate event.

Insurance is an essential part of running any business. If you are operating a small
business you need more than just property insurance. Taking out the
right insurance will help protect your business and minimize its exposure to risk

Your insurance requirements will vary according to the type of business you are
operating, but you should be aware that some forms of insurance are compulsory, such as
workers’ compensation and third party car insurance.

When you’re in business you deal with a variety of potential risks each day. Risk is not
something you can avoid, but it is something you can manage. Risk management will
increase the probability of success and reduce the probability of failure of your business.
 Types of insurance
 Assets & revenue insurance
 People insurance
 Liability insurance

Assets & revenue insurance

Building and contents
Covers the building, contents and stock of your business against fire and
other perils such as earthquake, lightning, storms, floods, impact, malicious
damage and explosion.

Burglary
Insures your business assets against burglary, and is most important for a retailer or
business that has premises that is not always attended.

 Electronic equipment
 Covers your electronic equipment for theft, destruction or damage

Business interruption or loss of profits

Covers you if your business is interrupted through damage to property by fire or other
insured perils. Ensures your ongoing expenses are met and profit is maintained through a
provision of cash flow.

Deterioration of stock
Covers your business for the deterioration of chilled, refrigerated or frozen stock
following the breakdown of the refrigerator or freezer they were kept in.

Employee dishonesty
Covers losses resulting from employee theft or embezzlement.

Farm insurance
Insurance for farms covering things such as crops, livestock, buildings, and machinery.

Goods in transit
Covers loss of, or damage to, the goods you buy, sell or use in your business when they
are in transit by ship, air, post, rail or road.

Machinery breakdown
Protects your business when mechanical and electrical plant and machinery at the
worksite break down.
Motor vehicles and fleets
It is compulsory to insure all company or business vehicles for third party
injury liability. Many different types of policies are available, so make sure
you understand the options before making a decision. There are four basic
options:

Compulsory third party (injury)

This policy covers you for claims made against you for personal injuries and
legal costs arising from the use of your car. You must obtain this insurance
to register your car.

Third party property damage

This policy covers your liability for damage to another person or to the
property of others and your legal costs. It doesn’t include repairs to your
own car if you caused an accident.

Third party, fire and theft

This policy covers you against the events covered above, as well as fire and
theft. It also insures against damage caused if your car was stolen.

Comprehensive

This policy covers you for all of the above plus damage caused to your own
car by you in an accident. If you're buying a car on an installment basis,
financiers will usually insist on this cover.
Property in transit
Covers theft or damage of items you use for business purposes that travel
with you, such as tools and equipment.

People insurance
Insurance cover for you and your employees:

It includes:

Superannuation
Workers compensation requirements
 Workers Compensation

You must provide accident and sickness insurance for your employees -
workers compensation - through an approved insurer. Workers
compensation is covered by separate state and territory legislation.

 Personal accident and illness

If you are self employed you won’t be covered by workers compensation, so

you need to cover yourself for accident and sickness insurance through a
private insurer. There are several types of life insurance. Some are
investment-type funds where you contribute over a certain time and get back
your investment plus interest earnings at the maturity date. Others are
designed to cover risk - things that could happen to you.

 Income protection or disability insurance -

covers part of your normal income if you are prevented from

working through sickness or accident.
 Trauma insurance - provides a lump sum when you are

diagnosed with one of several specified life threatening illnesses.

 Term life insurance or whole of life cover -

provides your dependents with a lump sum if you die.

 Total and permanent disability insurance -

provides a lump sum only if you are totally and permanently

disabled before retirement.

 Superannuation
If you are running a business or employing people, you are likely
to have superannuation obligations to your employees. If you are
self-employed you also need to provide for your retirement -
superannuation is generally used to provide for a retirement plan.
 Liability insurance
Types of liability insurance you need to consider:

 Public Liability

Public liability insurance protects you and your business against the
financial risk of being found liable to a third party for death or injury, loss or
damage of property or ‘pure economic’ loss resulting from your negligence.

 Professional Indemnity

Professional indemnity insurance protects you from legal action taken for
losses incurred as a result of your advice. It provides indemnity cover if your
client suffers a loss - either material, financial or physical - directly
attributed to negligent acts.

 Product Liability

If you sell, supply or deliver goods, even in the form of repair or service,
you may need cover against claims of goods causing injury or damage.
Product liability insurance covers damage or injury caused to another
business or person by the failure of your product or the product you are
selling.
What is Micro Insurance?
Micro insurance is a form of health, life or property
insurance, which offers limited protection at a low
contribution (hence “micro”). It is aimed at poor sections of
the population and designed to help them cover themselves
collectively against risks.

Micro insurance is the protection of low-income people

against specific perils in exchange for regular monetary
payments (premiums) proportionate to the likelihood and
cost of the risk involved. As with all insurance, risk
pooling allows many individuals or groups to share the
costs of a risky event
 Definitions of micro insurance

1. Micro insurance is insurance with low premiums and low caps /

coverage. In this definition, “micro” refers to the small financial

transaction that each insurance policy generates. The Micro insurance
Regulations, issued in 2005 by the Indian Insurance Regulatory and
Development Authority (IRDA), for example, adopted this definition in
explaining “micro insurance products” as those within defined (low)
minimum and maximum caps. The IrDA’s characterization of micro
insurance by the product features is further complemented by their
definition for micro insurance agents, those appointed by and acting for
an insurer, for distribution of micro insurance products (and only those
products).

2. Micro insurance is a financial arrangement to protect low-income people

against specific perils in exchange for regular premium payments
proportionate to the likelihood and cost of the risk involved (Churchill,
2006) The author of this definition adds that micro insurance does not refer
to: (i) the size of the risk-carrier (some are small and even informal, others
very large companies); (ii) the scope of the risk (the risks themselves are by
no means “micro” to the households that experience them); (iii) the delivery
channel: it can be delivered through a variety of different channels,
including small community-based schemes, credit unions or other types of
microfinance institutions, but also by enormous multinational insurance
companies, etc.
 3.Micro insurance is synonymous to community-based financing
arrangements (Preker et al, 2002), including community health funds,
mutual health organizations, rural health insurance, revolving drugs funds,
and community involvement in user-fee management. Most community
financing schemes have evolved in the context of severe economic
constraints, political instability, and lack of good governance. The
common feature within all, is the active involvement of the community in
revenue collection, pooling, resource allocation and, frequently, service
provision.

4. Micro insurance is the use of insurance as an economic instrument at the

“micro” (i.e. smaller than national) level of society (Dror & Jacquier, 1999).
This definition integrates the above approaches into one comprehensive
conceptual framework. It was first published in 1999, pre-dating the other
three approaches, and has been noted to be the first recorded use of the term
“micro-insurance”. Under this definition, decisions in micro insurance are
made within each unit, (rather than far away, at the level of governments,
companies, NGOs that offer support in operations, etc.).

Insurance functions on the concept of risk pooling, and likewise, regardless

of its small unit size and its activities at the level of single communities, so
does micro-insurance. Micro insurance links multiple small units into larger
structures, creating networks that enhance both insurance functions (through
broader risk pools) and support structures for improved governance (i.e.
training, data banks, research facilities, access to reinsurance etc.). This
mechanism is conceived as an autonomous enterprise, independent of
permanent external financial lifelines, and its main objective is to pool both
risks and resources of whole groups for the purpose of providing financial
protection to all members against the financial consequences of mutually
determined risks.

The last definition therefore, includes the critical features of the

previous three:

1. transactions are low-cost (and reflect members’ willingness to pay);

2. clients are essentially low-net-worth (but not necessarily uniformly poor);
3. communities are involved in the important phases of the process (such as
package design and rationing of benefits); and
4. the essential role of the network of micro insurance units is to enhance
risk management of the members of the entire pool of micro insurance units
over and above what each can do when operating as a stand-alone entity.
 History and Vision
The Micro Insurance Agency has its roots within Opportunity International,
a large microfinance network motivated by Jesus Christ’s call to serve the
poor. With a network of 47 microfinance institutions, Opportunity
International has been serving the entrepreneurial poor since 1971. In
partnership with Opportunity’s microfinance institutions, we began working
in 2002 on the development of a range of life, property, livestock, crop
derivative, disability, unemployment and health insurance products to cover
the risks faced by Opportunity’s loan clients.
Micro Insurance Agency staff observed that the risks the poor face can often
set them back months and years behind where their loans and savings
products offered by Opportunity had taken them. For instance, a death of a
family member from HIV/AIDS – a “pre-condition” most insurance
companies would not cover – would often mean expensive funeral costs and
the loss of a breadwinner, resulting in increased economic hardship for the
family. In response, Micro Insurance Agency staff developed an affordable
funeral benefit product that did not exclude any pre-conditions, including
HIV/AIDS. This transformed the mindset of retail insurance providers in the
country, who later developed similar non-exclusive products in light of the
competing environment.
Through the experience of serving Opportunity’s microfinance institutions
and their clients, Micro Insurance Agency staff observed that the products
most demanded by the poor are not always the ones available. Health
insurance, for example, is a critical need of the poor but the most limited in
terms of supply. In addition, policies that are available are often based on
first world practices and are too complex for the simple coverage demanded.
Further, when offered on an individual, one-off basis, high premium
requirements and a need to pay in a single lump sum preclude a huge sector
of the market from access. New distribution models and channels were
needed to increase access and reduce the effective price charged to clients.
In 2005, the Micro Insurance Agency was founded by Opportunity
International as a fully-owned subsidiary capable of offering insurance
products and services to a wide range of customers.
Our mission is to empower the materially poor to transform their lives by
insuring them against financial risk and its consequences. Specifically, we
seek to serve the economically active poor who live on $4 per day or less in
developing countries and provide a safety net to reduce economic setbacks.
 The Global Landscape

It is estimated that only eighty million out of the world's 2.5 billion poor are
now covered by some form of micro insurance. Most remain without access
to this critical financial service. In India and China, where organizations are
estimated to serve nearly 30 million micro insurance clients each, the
percentage of poor lives insured hovers below 3%. In Africa this figure is
much lower – just 0.3% of the continent’s poor are insured. According to
recent data, in 23 of the poorest 100 countries in the world, there is currently
no identified micro insurance activity, representing an unsaved population of
370 million.
DEVELOPMENT OF MICRO INSURANCE IN
INDIA

Macro economics / social statistics

HDI Rank 127
Population 1.5bn
GDP growth rate 6.9
Proportion of population living on less than 35%
US$1 per day
Average annual inflation 5.3%
Adult literacy 69%
Primary school completion rate 85%
Under 5 mortality rate per 1000 82
Total workers remittances 21.7bn

Captured statistics on micro insurance

No. of health / life / property/ 221/51/28/33

AD & D insurance products

No. of commercial/ mutual 21/0/4/0

CBO/NGO/ providers

No of regulated/unregulated 22/3
Insurance operations

No. of donors working of micro insurance 13

No. of covered lives 30,11,1690

Example of Indian micro insurance product
Yeshasvini trust

Group of individual products individual/ household level

Term 1 year

Eligibility requirements cooperative society member &

there family

Delivery models Yeshasvini trust partners with

karnatak secretary

Product coverage predefined medical surgeries & costs

connected to common ward admission
Out patient care is covered but related
drugs.

Key exclusions all surgery not included on their list.

Inpatient care without surgery

Pricing members pays Y1 –INR 60 per insured , INR 30

subsidized by government
Y2 INR 60 per insured
Y3 120 per insured

No. of policyholders 1.50 million

Historically in India, a few micro-insurance schemes were initiated, either
by non-governmental organizations (NGO) due to the felt need in the
communities in which these organizations were involved or by the trust
hospitals. These schemes have now gathered momentum partly due to the
development of micro-finance activity, and partly due to the regulation that
makes it mandatory for all formal insurance companies to extend their
activities to rural and well-identified social sector in the country (IRDA

2000). As a result, increasingly, micro-finance institutions (MFIs) and

NGOs are negotiating with the for-profit insurers for the purchase of
customized group or standardized individual insurance schemes for the low-
income people. Although the reach of such schemes is still very limited
anywhere between 5 and 10 million individuals---their potential is viewed to
be considerable. The overall market is estimated to reach Rs. 250 billion by
2008 (ILO 2004).

The insurance regulatory and development authority (IRDA) defines rural

sector as consisting of:

• a population of less than five thousand,

• a density of population of less than four hundred per square kilometer

• More than twenty five per cent of the male working population is
engaged in agricultural pursuits. The categories of workers falling
under agricultural pursuits are: cultivators, agricultural laborers, and
 workers in livestock, forestry, fishing, hunting and plantations,
orchards and allied activities.

The social sector as defined by the insurance regulator consists of:

• Unorganized sector
• informal sector
• economically vulnerable or backward classes, and
• Other categories of persons, both in rural and urban areas.

The social obligations are in terms of number of individuals to be covered by

both life and non-life insurers in certain identified sections of the society.
The rural obligations are in terms of certain minimum percentage of total
polices written by life insurance companies and for general insurance
companies, these obligations are in terms of percentage of total gross
premium collected. Some aspects of these obligations are particularly
noteworthy. First, the social and rural obligations do not necessarily require
(cross) subsidizing insurance. Second, these obligations are to be fulfilled
right from the first year of commencement of operations by the new insurers.
Third, there is no exit option available to insurers who are not keen on
servicing the rural and low-income segment. Finally, non-fulfillment of
these obligations can invite penalties from the regulator.

In order to fulfill these requirements all insurance companies have designed

products for the poorer sections and low-income individuals. Both public
and private insurance companies are adopting similar strategies of
developing collaborations with the various civil societies associations. The
presence of these associations as a mediating agency, or what we call a
nodal agency, that represents, and acts on behalf of the target community is
essential in extending insurance cover to the poor. The nodal agency helps
the formal insurance providers overcome both informational disadvantage
and high transaction costs in providing insurance to the low-income people.
This way micro insurance combines positive features of formal insurance
(pre paid, scientifically organized scheme) as well as those of informal
insurance (by using local information and resources that helps in designing
appropriate schemes delivered in a cost effective way). In the absence of a
nodal agency, the low resource base of the poor, coupled with high
transaction costs (relative to the magnitude of transactions) gives rise to the
affordability issue. Lack of affordability prevents their latent demand from
expressing itself in the market. Hence the nodal agencies that organize the
poor, impart training, and work for the welfare of the low-income people
play an important role both in generating both the demand for insurance as
well as the supply of cost-effective insurance.
Scope for Micro-insurance

In most developing countries social protection systems are underdeveloped

and generally only cover employees with formal employment. Workers in
the informal economy are left to their own devices, or rely heavily on the
support of their community. NGOs and micro-finance institutions that offer
micro insurance can fill this gap. But there are several things that
differentiate it from normal insurance. First, it is group insurance that can
cover thousands of customers under one contract. For example Insurance
currently covers only 2 per cent of the poor in India. Up to 90 per cent of the
population, or 950 million people, are excluded from services—a huge
missing market. For example more than 75,000 tsunami-affected people in
the Indian state of Tamil Nadu further are to be offered insurance for the
first time, following the launch of a new partnership between leading insurer
Allianz and humanitarian agency CARE International. Second, micro-
insurance requires an intermediary between the customer and the insurance
company. Preferably, this intermediary is a nongovernmental organization
(NGO) or micro-finance institution, for example a rural bank that can handle
the whole distribution and most of the administration process.
Basic Micro Insurance Principles
To serve poor people, micro-insurance must respond to their priority needs
for risk protection, be easy to understand, and affordable. Depending on the
market, they may seek health, car, or life insurance provisions. Basic
principles that should be observed by micro-insurance providers are
universal to insurance and risk management. These include:

1. Similar unit’s exposition to risk: Insurers require that risks in

a particular class or group of policies be similar. Insurers also require that
the group insured (or the "risk pool") include a large number of these
similar risks, relative to the total population. Large numbers of
policyholders reduce the potential for adverse selection (a situation where
claims are higher than expected because only high-risk households
purchase the insurance) and increase the likelihood that the variance of
actual claims will be closer to the expected mean used in calculating
premiums.

2. Limited policyholder control over the insured event:

Insurance protection cannot be offered if policyholders can control
whether an insured event will occur. E.g., selling an insured truck and
claiming it as stolen; setting fire to an old, insured home to build a new
one with the insurance settlement; failing to properly care for an insured
goat thereby increasing the chance it will die of disease, etc..
3.Insurable interest of policyholders:
Insurance cannot be provided to policyholders who have a vested interest in
a loss occurring. A property insurance policy, for example, on a home
cannot be sold to anyone other than the residents of the home.

4.Losses determination and measurability:

Insurance providers must have a mechanism for verifying the occurrence of
a loss and identifying its cause and value.

5.No catastrophe:
The risk-pooling mechanism of insurance breaks down against risks that
cause large losses for a substantial portion of the risk pool at the same time.

6.Chance of loss calculation:

Setting insurance premiums require estimating the size of expected losses
and the chance of loss.

7.Economically affordable premiums:

In general, for an insurance policy to be an attractive purchase, the cost of
premiums must be substantially less than the benefit offered by the policy.
AN OVERVIEW OF THE MARKET

C Wealthy A

Middle man

E
C
Poor

Severely poor

The market for micro insurance is represented by this pyramid diagram.

Formal sector insurance companies generally focus on the area identified as
“A”. In this realm the customers are corporations and wealthy individuals,
and the products are voluntary products such as life insurance, and

obligatory products required either by law (such as motor third party

liability) or by banks (such as property loss and credit life). Also offered are
products covering employees and civil liability. Most of the non-auto
related commercial products are being sold within the area marked “B”. The
aggregate market for microfinance providers is generally in the area
identified as “C”. Some MFPs require borrowers to obtain insurance for
property, or credit-life insurance as a means of protecting the institution’s
interests. Area “D” indicates the broad range of products offered by the
social security and public health insurance systems of developing country
governments. They include coverage for pensions, disability benefits,
primary health care, and medications. The weakness of this sector is
indicated by the dashed line that suggests incomplete coverage. The
potential market for micro insurance is indicated as “E”. This extends above
the MFP range in providing access to individuals and others that cannot
obtain appropriate products from the commercial sector. The micro
insurance range also extends below the MFP range because it addresses
agricultural coverage in some cases, and is now being sold through many
delivery channels other than MFPs. Just a few of these delivery channels
include:
• Low-income focused retailers in South Africa
• Post offices in Indonesia
• On bags of agricultural inputs or through computer kiosks in India.
MICRO INSURANCE DELIVERY
MODELS
One of the greatest challenges for micro-insurance is the actual delivery to
clients. Methods and models for doing so vary depending on the
organization, institution, and provider involved. In general, there are four
main methods for offering micro-insurance the partner-agent model, the
provider-driven model, the full-service model, and the community-based
model. Each of these models has their own advantages and disadvantages.

• Partner agent model: A partnership is formed between the

micro-insurance scheme and an agent (insurance company,
microfinance institution, donor, etc.), and in some cases a third-party
healthcare provider. The micro-insurance scheme is responsible for
the delivery and marketing of products to the clients, while the agent
retains all responsibility for design and development. In this model,
micro-insurance schemes benefit from limited risk, but are also
disadvantaged in their limited control.

Full service model:

The micro-insurance scheme is in charge of everything; both the design and

delivery of products to the clients, working with external healthcare
providers to provide the services. This model has the advantage of offering
micro-insurance schemes full control, yet the disadvantage of higher risks.
• Provider-driven model:

The healthcare provider is the micro-insurance scheme, and similar to the

full-service model, is responsible for all operations, delivery, design, and
service. There is an advantage once more in the amount of control
retained, yet disadvantage in the limitations on products and services.

• Community-based/mutual model: The policyholders or

clients are in charge, managing and owning the operations, and
working with external healthcare providers to offer services. This
model is advantageous for its ability to design and market products
more easily and effectively, yet is disadvantaged by its small size and
scope of operations.
NEW MODELS FOR POOR COMMUNITIES

Much interest over the last few decades has focused on helping communities
to establish mutual or community-based insurance schemes. Professionals
typically manage mutual insurance companies. Community-based schemes,
promoted by ILO STEP and CIDR among others, tend to be run by well
meaning local people who give freely of their time, but are not insurance
professionals. Often people who were simply in need of insurance end up
being insurance managers with these schemes. One member of the
management committee of a community- based scheme in Tanzania noted
that he “wants insurance, but doesn’t want to be an insurer.” In community-

based schemes, the limited management capacity frequently leads to a range

of difficulties. The key issues of concern for community-based schemes
include:

Pricing – Often the process of pricing is focused on what people say they
can pay rather than being linked to the cost structure of benefits that the
group wants to receive.

• Insurance is subject to cash flow fluctuations and thus requires significant

reserves. These schemes frequently have insufficient reserves or no
reserves at all. Also, commercial reinsurance is rarely available to
 unregulated insurance schemes thus leaving them with no ability to
manage cash flow deficits.

• Controls on management are weak and temptation is strong. Fraud by

management is frequently a problem.

• These schemes are limited in size to those people within the defined local
area. This reduces their ability to diversify a rather small risk pool, and
enhances the potential for adverse selection, both of which make
sustainability a serious challenge for local management.

• Finally, in many countries there is no legal framework for these schemes.

Indeed regulators are often unwilling to allow such schemes for fear that
they will not be able to adequately supervise many small schemes run by
non-professionals. This is the case in India. Service providers, most
typically hospitals and other healthcare providers have offered pre-
financing mechanisms that act somewhat like insurance. These products,
it is argued, will attract more people to the facility and the people who
come will be able to pay for the services. Often this becomes a problem
because providers have limited ability to manage the insurance
administration issues. One overseer of a particular group of hospitals
noted that attempting to offer micro insurance could present a dual threat
to the hospital network for which he works. He noted that the hospital
administrators “do not even know how to price their own healthcare
services”. Therefore, they miss-price their premiums based on those
prices, which are typically too low. The resulting increase in patients
using the insurance leads to even higher losses, due to higher
 administrative costs and incorrect fees that do not cover the actual costs
of services. Governments also provide a form of micro insurance through
the programs they provide for low-income Citizens. Unfortunately, in
many countries these programs are simply insufficient to address the
financial risks of the low- income and destitute populations. Certainly
there is a population that will not be covered by commercial or other non-
government micro insurance. However, if a proper balance could be
found, it is possible that the combination of government programs,
commercial micro insurance, mutual insurance, and traditional
commercial insurance could make each of these more efficient, and make
the government interventions more effective in addressing those that
truly require such services.

Need for Developing Micro-Insurance in India –

IRDA perspective

Background

• Micro-insurance refers to protection of assets and lives against insurable

risks of target populations such as micro-entrepreneurs, small farmers
and the landless, women and low-income people through formal,
semiformal and informal institutions. Such products are often bundled
 with micro-savings and micro-credit, thereby allocating scarce resources
to micro-investments with the highest marginal rates of return. Micro
insurance is the most underdeveloped part of microfinance. Yet various
schemes exist that are viable, benefiting both the institutions and their
clients. Such schemes have generally served two major purposes: (i) they
have contributed to loan security; and (ii) they have served as instruments
of resource mobilization. The greatest challenge for microinsurance lies
in the combination of viability and sustainability with outreach.
• Although introduction of sound practices such as appropriate policy sizes
and timely payment of installments of premium or positive incentives to
renew on time in order to avoid policy getting lapsed can be feasible, the
ultimate effectiveness of interventions focusing on institutional
transformation and sound insurance practices will vary considerably,
depending on the appropriateness of the regulatory environment.

Development Goal

To enable microinsurance to be an integral part of a country's wider

insurance system, it is important for every insurer to adjust its costs of
serving marginal clients in remote areas, collecting premiums and
installments, and offering doorstep services. It is also important to recognize
a wide network of intermediaries in the rural and social sectors and notify
regulations in order to guide and supervise the micro-insurance service
providers and their customers.
Today we have a variety of microfinance institutions with national and local
outreach. Many of them have already become corporate agents or have
entered into referral

arrangements with insurers. However, semiformal institutions including

savings and credit cooperatives, NGOs and self-help groups which have
immense potential in carrying the message of insurance as also solicit
insurance business are yet to be utilized in a manner where their true
potential can be harnessed to increase the insurance penetration levels. This
is due to restrictions in the existing agency regulations in terms of minimum
eligibility norms in order to become an agent.
Depending on the existence and vigour of such institutions, the following
alternatives have emerged, for offering strategic entry points for
microinsurance development:

• Adapting formal insurance arrangements to the needs of the micro-

economy.

• Upgrading non-formal (comprising semiformal and informal)

insurance arrangements with insurance companies.

• Linking formal and non formal insurance institutions with banks and
self-help groups.

• Establishing new local institutions providing microinsurance services.

The first three strategies may be inter-connected:

• adapting insurance companies to the requirements of the micro-

economy is a first step; then
• Linking them as wholesale institutions to self-help groups as retailers;
and finally,
• Upgrading self-help groups e.g. to the level of financial cooperatives
or village banks.

If insurers are to serve customers who differ widely in terms of service costs
and risks, the only viable inducement for them is an adequate margin, lest
they exclude small farmers, - micro-entrepreneurs and people in remote
areas. Only sound social insurance, which combines a social mandate with
profit-making, has a chance of sustainability.

Institutional Adaptation

The experience so far has been that formal financial institutions serve but a
fraction of the population, which typically lies within the upper quartile of
the social hierarchy. Through adaptation to the microfinance market
requirements, they may gradually expand into the second-highest quartile
and into segments of the lower quartiles. Within the foreseeable future they
will normally not be able to fully serve that market.
Non formal finance mostly rests on local institutions which are directly
accessible to all segments of the population. Self-Help Groups (SHGs) are
member-owned and member-controlled local institutions. They may either
be financial groups, with financial intermediation as their primary purpose;
or non financial groups, with financial intermediation as a secondary
purpose, such as vendors' associations, family planning groups and
numerous other types of voluntary associations.

The functions that need to be focused must include: providing guidance to

members, collecting premium installments from members, insurance
services to members, communication and exchange of experience, providing
linkages with banks, NGOs or donors, supporting the proposals of individual
members to insurance companies through recommendations.

Linkage to Insurers

On a modest scale, various forms of life and health insurance have been
successfully practiced by different institutions in different countries,
particularly as part of loan protection schemes. Micro-insurance procedures
and services should be set by insurers rather than the regulator. Appropriate
procedures and services should be applied to attain:

(1) Sound financial management,

(2) Convenient and safe savings premium collection and deposit facilities,

(3) Appropriate claim appraisal and processing procedures,

(4) Adequate risk management,

(5) Timely collection of premium installments,

(6) Monitoring and

(7) Effective information gathering, all of which may include cooperation

between different formal and non-formal intermediaries in fields where each
is most effective.

Proposed Micro-insurance Regulations

In order to introduce the concept micro-insurance it is necessary to draft

suitable bring in suitable regulations to enable insurers to design and
distribute and service micro-insurance products and discharge their
obligations to the rural and social sectors as per provisions of the Insurance
Act, 1938.

1. It is proposed that an insurer transacting life insurance business shall

be permitted to provide life micro-insurance products as well as
general micro-insurance products provided it ties up with an insurer
transacting general insurance business for the general micro-insurance
products, and vice versa.
In addition to an insurance agent or corporate agent or insurance broker who
are authorized to solicit and procure insurance business, including micro-
insurance business with an insurer in accordance with the provisions of the
Insurance Act, 1938 and the regulations made there under it is also proposed
to introduce the concepts of “micro-insurance product” and “micro-
insurance agent

Micro-insurance Product
1. A “life micro-insurance product” means any term insurance
contract with or without return of premium, any endowment
insurance contract or health insurance contract, with or without
an accident benefit rider, either on individual or group basis, as
per terms stated in the Table A below, filed with the Authority:
Table A:

Type of Minimum Maxim Term of Term of Minimum Maximum

Cover Amount um Cover Cover Age at age at entry
of Cover Amount Min. Max. entry
of
Cover
Term Rs. Rs. 5 year 7 years 18 60
Insuran 10,000 50,000
ce with
or
without
return
of
premiu
m
Endow Rs. Rs. 5 year 7 years 18 60
ment 10,000 50,000
Insuran
ce
Health Rs. Rs. 1 year 7 year 18 60
Insuran 10,000 15,000
ce
Contrac
t
 Acciden Rs. 10,000 Rs. 1 year 5 years 18 60
t Benefit 50,000
as rider

NOTE: The present average sum insured is around Rs. 5,000. This is
highly
inadequate to provide any tangible relief even to an individual below
the
poverty line. Therefore, it is suggested that the minimum amount of
cover of Rs.
10,000 appear more realistic.

2. A “general micro-insurance product” means any health

insurance contract, any contract covering the belongings such
as hut, livestock, any personal accident contract, or tools or
instruments, either on individual or group basis, as per terms
stated in the Table B below, filed with the Authority:
Table B:

Type of Minimu Maximu Term of Term of Minimum Maximum age at

Cover m m Cover Cover Age at entry
Amount Amount Min. Max. entry
of Cover of Cover
Hut or Rs. Rs. 1 year 1 year 18 70
livestock 10,000 20,000
or Tools
or
impleme
nts or
other
assets—
against
all perils
Health Rs. Rs. 1 year 1 year 18 60
Insuranc 10,000 15,000
e
Contract
Personal Rs. Rs. 1 year 1 year 18 60
Accident 10,000 50,000

Micro-insurance Agent
 • A “micro-insurance agent” shall be a Non Government Organization
(NGO) or a Self Help Group (SHG).

• Explanation: For the purposes of this regulation:

• A Non Government Organization (NGO) shall be a registered non-

profit organization under the Society’s Act, 1968 with a proven track
record of working with marginalized groups with clearly stated aims
and objectives, transparency, and accountability outlined in its
memorandum, rules and regulations and demonstrates involvement of
committed people.
• Self Help Group (SHG) may be an informal group or registered under
Societies Act, State Co-operative Act or as a partnership firm,
consisting of 10 to 20 with a proven track record of working with
marginalized groups with clearly stated aims and objectives,
transparency, and accountability outlined in its memorandum, rules
and regulations and demonstrates involvement of committed people.

• The minimum number of members comprising a group should be

atleast ten for insurance of individuals, and atleast fifty for group
insurance.

Initiative Taken By Private Sectors

 Tata AIG Life - First insurance company to
launch Micro Insurance
• First major Micro Insurance initiatives venture by an Indian insurance
company
• Launches three new Micro Insurance products and five Micro
Insurance branches
• Adopts a tailor made rural communication strategy to reach out to the
rural community

American International Group, Inc. (AIG)

American International Group, Inc. (AIG), world leaders in insurance and
financial services, is the leading international insurance organization with
operations in more than 130 countries and jurisdictions. AIG companies
serve commercial, institutional and individual customers through the most
extensive worldwide property-casualty and life insurance networks of any
insurer. In addition, AIG companies are leading providers of retirement
services, financial services and asset management around the world. AIG's
common stock is listed in the U.S. on the New York Stock Exchange, as
well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Micro Insurance is the process of delivering and servicing relevant and
affordable life insurance products to the low-income socio economic strata.
The focus of Tata AIG Life’s Micro insurance program is rural India, where
traditionally the far-flung, lower and lower middle-income segments have
had limited access to life insurance services.

POLICES AVAILABLE

The following special Micro Insurance products from Tata AIG Life are
now available for the rural population at the bottom of the pyramid.

NAVKALYAN YOJANA

AYUSHMAN YOJANA

SAMPOORN BIMA YOJANA

Navkalyan yojana
Navkalyan yojana is a regular premium payment micro insurance protection
plan, designed specially for the rural population who seek life insurance
protection without any maturity benefits. The term for which the premium is
payable is 5 years. The insurance product only offers death benefits and
neither maturity befits nor bonuses are payable under this policy
The life insurance benefits under this plan is the death benefit that is payable
in the unfortunate event of death of the policy holder provided the policy is
in force at the time of death

Products features
Policy terms
5 years
Coverage limit
Minimum death benefit 5000
Maximum death benefit 50000
Eligibility ages
 18 year s
General eligibility criteria
Declaration of health as per the proposal form.
Premium amount is decided according to
Age
Death benefit selected

POLICY BENEFIT
A) DEATH BENEFIT
the policy holder nominee will be paid the death benefit i.e. sum assured in
the event of the policyholders unfortunate death during the term of policy
provided the policy has not lapsed on the death of the policyholder .

B) EXTRA PROTECTION
Wants more the safeguard against other uncertainties in life, the policyholder
can add the accident death benefit rider to this product in case he or she
chooses the sum assured of at least rs 10000 under the basic plan. If the
accident death benefit rider is taken, an additional amount equal to the rider
sum assured becomes payable in the event of death due to accident.

WHO CAN PURACHSE THIS POLICY

All the earning men n women in the age group of 18 to 60 years can
purchase this plan provided they satisfy the condition of health declaration
mention in the proposal form

TAX BENEFIT
As per current tax law

MODE OF PAYMENT
Cash
Demand draft
cheque

FREQUENCY OF PAYMENT
Once a month
Once in three month
Once in six month
Once a year

MODAL FACTOR
The policy holder can choose the pay the premium s either monthly,
quarterly, semiannually, annually. When the monthly mode is chosen the
monthly premium payable will be .0883 times the annual premium
for quarterly mode of payment the quarterly premium payable will be .26
times the annual premium and for semi annually mode the semiannual
premium will be .51times the annual premium
GRACE PERIOD
Tata AIG life allows a grace period of 31 days for all modes of payment
from the due date for the policyholder to make the premium payment. The
policy will remain the in force during the period. The policy shall lapse and
have no further value is premium is not paid with in the grace period.

Restoration of lapsed policy

In case the policy has lapsed , the policy holder may restore or resistance the
same at the absolute discretion of tata aig life insurance company limited
within three years from the date of the date of first unpaid premium .
however the company will require
A) a written application from the policy holder for
restoration
B) current health certificate and other evidence of
insurability
C) payment of all overdue premiums with intrest

15 days money back guarantee ( free look period )

1 the policy holder has the right to cancel the plocy by giving written notice
to the company and obtain a refund of all premiums paid without intrest
fater deducting for any expenses have been incureed for issuning the policy
such as medical examnination cost and stamp duty cost and for all payments
made under the policy
2 such notice must be signed by the policy holder nad recived directly with
the company within 15 days after the policy is recived
Exclusions
If the insured , whether sane and insane commits suicide within one year
from the issue date or commencement date , which ever is later , as defined
the policy contract , our liability shall be limited to the refund of premium
paid without interest. In the case of reinstatement such refund of premium
shall be calculated from the commencement date

AYUSHMAN YOJANA

Ayushman yojna is micro insurance protection plan where the policy holder
had to pay a single premium at the beginning of the policy term. An
outstanding feature of this plan specially designed for the rural population
with seasonal incomes is that the policy holder gets back his or her premium
with a 25%addition on survival to the end of the policy term. For example ,
if one pays a single premium of rs 100 one get back rs 125 on survival to the
end of the policy term.
The life insurance benefits under this plan last for a full 10 year term if
policy is held to maturity .
The life insurance plan benefit under this plan is the death benefit that
payable in the unfortunate event of death of the policy holder

Product features
Policy term
10 years
Coverage limit
Minimum death benefit ( sum assured ) rs 5000
Maximum death benefit ( sum assured ) rs 50000

Eligibility benefits
. minimum issue age 18 years
. maximum issue age 60 years
General eligibility criteria
Declaration of health as per the proposal form

Premium amount decided according to :

Age
Sum assured

Policy benefit

a. death benefit
the nominee will be paid the basic sum assured in an unfortunate event of
death of the policy holder during the 10 year term of the policy

b . maturity benefit
on survival to the end the policy term the policyholder shall be paid 125%
single premium paid

c. policy loan
the policyholder may take a loan from the company up to ascertain
percentage of the cash value accrued on the policy as on date of the loan .
interest will be charged on the loan at the rate applicable to at that time and
is subject to change from time to time as per the companies discretion

such a loan needs to be repaid with interest with the term of the policy ,
failing which the maturity proceeds or death benefit whichever is applicable,
will be reduced bye the outstanding amount along with interest due

mode of payment
cash
demand draft
cheque
tax benefits
as per current tax laws

15 days money back guarantee

The policy holder has the right to cancel the policy by giving written notice
to the company and to obtain a refund of the premium paid without interest
after deducting for nay expenses which have been incurred for issuing the
policy and for payments modes under this policy
. such notice must be signed by the policyholder and received directly by
the company within 15 days after the policy is received

Surrender of policy
Policy can be surrender at any time . applicable cash value will be received

Guaranteed surrender value

. it refers to the minimum guaranteed amount of cash value of the policy
.the guaranteed surrender value when is allowable under the policy is equal
to the percentage as shown below , of the single premium paid for the
policy

Policy year percent of the single premium paid

1st 60%

2nd 70%

3rd 75%

4th 80%

5th 85%

6th 90%

7th 95%

8th 100%

9th 110%

10th 120%
 Exclusion

If the insured whether sane or insane, commits suicide within one year from the issue
date or commencement date whichever is later our liability shall be limited to the
refund of premium paid without interest

Sampoorn bima yojna

Sampoorn bima yojna is a micro insurance protection plan where the policy
holder receives all the premiums paid during the term of the policy upon
survival till the term policy , provided the policy is in force at the end of the
term . what’s more, premium are payable for only 10 years where as the
coverage under the policy is for 15years
This low cost insurance plan is designed for the rural population who wish
to provide their family with security. The life insurance benefit under this
plan is the death benefit is payable in the fortune event of death of the policy
holder provided the policy is in force at the time of death.

Product features
Policy term
15years
Premium paying term
10 years
Coverage limit
. minimum death benefit ( sum assured ) rs 5000
Maximum death benefit ( sum assured ) rs 50000
Eligibility benefits
. minimum issue age 18 years
. maximum issue age 60 years

General eligibility criteria

Declaration of health as per the proposal form
Premium amount decided according to :
Age
Death benefit selected

Policy benefit
Death benefit
The policy holder nominee will be paid the death benefit i.e. sum assured in
the event of the policyholder unfortunate death during the term of the
policy provided the policy has not lapsed on the death of policy holder

B . maturity benefit
at the end of 15 years , the policyholder will receive all the premium paid
during the premium paying term of ten years

mode of payment
cash
cheque
demand draft

frequency of payment
once a month
once in three month
once in six month once on a year

tax benefit
as per current tax laws

modal factor
premiums can be paid either monthly , quarterly , semiannually ,or annually.
When the monthly mode is chosen the monthly premium is payable will be .
0883 times the annual premium . for quarterly mode of payment the
quarterly premium payable will be .26 times the annual premium and for
semi annual mode the semi annual premium will be .51 times the annual
premium.

Grace period

31 days for all modes of payment from the due date for policyholder to
make the premium payment
The policy will remain in force during the period the policy shall lapse
and have no further value if Premium is not paid within the Grace Period.
However if the policy holder has paid at least three annual Premiums and is
unable to pay any subsequent premiums, the policy will acquire cash value
and policyholder can exercise non forfeiture option

Non forfeiture option

If the policyholder has paid the first three years of premium and then is
unable to pay future premiums the policy will continue to be in force with
reduced death and maturity benefit

In case of death such reduced benefit would be original death benefit

proportion to the number of premiums actually paid to the total number of
premiums stipulated

In case of maturity such reduced benefits will be total premiums paid on the
basic policy excluding the rider premium

Premium loan
In case the policyholder is unable too pay the premium with in the grace
period and provided the policy is in force the premium then due can be
advanced as a loan to the policy holder upon request

This facility can be availed only if the cash value of the policy is equal to
or greater than the premium in defaults any interest accrued on the premium
loan on the policy

This feature is available, provided at least three annual premiums have been
paid and the policy has completed three years . interest will be charged on
the advance amount of premium

Interest rates as existing on the date of premium advancement will be

applicable and is subject to change from time to time as per the company’s
discretion

Restoration of the lapsed policy

In case the policy has lapsed , the policyholder may reinstate the same at
the absolute discretion of tata aig life insurance company limited within
three years from the date of the first unpaid premium
However the company will require
A) a written application from the policyholder for reinstatement
B) current health certificate and other evidence of insurability
C) payment of all overdue premium with interest
D) repayment or reinstatement of any indebt ness outstanding at the due
date of the unpaid premium plus interest

guaranteed surrender value

the policyholder is entailed to guaranteed surrender value which means that
he or she will receive a guaranteed amount of cash in the event that he or
she decides to surrender the policy after the first three years provided all
premiums have been paid during that period
the guaranteed cash value of the policy will not be less than 30% of all the
premiums paid , excluding the first year of premium , provided the premium
has been paid for at lest three consecutives years

15 days money back guarantee ( free look period )

1 the policy holder has the right to cancel the policy by giving written notice
to the company and obtain a refund of all premiums paid without interest
after deducting for any expenses have been incurred for issuing the policy
such as medical examination cost and stamp duty cost and for all payments
made under the policy
2. such notice must be signed by the policy holder and received directly
with the company within 15 days after the policy is received

Exclusions
If the insured , whether sane and insane commits suicide within one year
from the issue date or commencement date , which ever is later , as defined
the policy contract , our liability shall be limited to the refund of premium
paid without interest. In the case of reinstatement such refund of premium
shall be calculated from the commencement date
RESEARCH OBJECTIVE

To find out potential depth in society for providing opportunities for further
extension for micro insurance

Sub objective:

 Determine need and ability of people segment whose per day

income is less than 100 bugs. What really matters to him or her
while think about insurance.

 Determine awareness about insurance among them. if aware

then source of information

 To determine the govt. and private sector proceeding in this

area and extent of their success
RESEARCH METHODOLGY

Data collection
For data collection, we developed a well defined questionnaire as a research
instrument, consisting questions aimed to measure the people perception
about insurance, their need and problems, bottleneck why hadn’t insured,
and target to find out opportunities for further extension of micro insurance.
We conducted unstructured interviews (sample size) of 52 general people
having income even less than 100 bugs per day like vendors, rickshaw wala,
coolies etc. at survey location (Kashmiri gate, old Delhi railway station,
prostitution area etc. All the data generated was primary data that was
generated directly from face to face communication

Data analysis

The data collected based on structured questionnaire is recorded on an excel

sheet and with the help of SPSS software a pie chart analysis along with
pillar data analysis is generated and based on this findings a qualitative
inferences are made for each analysis. The same is being presented in form
of graphs and tables

SURVEY RESULTS
The following are our findings regarding the survey conducted by us. The
following graphs show the potential depth from different perspectives, as
shown below:
ANALYSIS AND INTERPRETATION
Table 1:
Gender of the respondents

S. No. Sex No of Respondents Percentage

1. Male 50 91
2. Female 05 09
Total 55 100

Chart 1:
Gender of the respondents
No of Respondents

9% 0% 1
2
3
4
5
6
7
8
9
91% 10

Inference:
The above reveals the fact that Majority of the respondents, about 91%
belong to the category of male and 9% belong to the category of female.
Table 2: Age of the respondents Chart 2:

frequency
17% 12%

AGE 1
2
3
38% 4

25 20
33%

Inference: 20 17
The above reveals the fact that Majority of the respondents, about 38%
15
belong to the category of 2 age and 33% belong to the category of 3 of age,
9
10
17% belong to category 2 and 12% belong to the category 1 of age.
6
5
Table 3: Educational Qualification Chart 3:
Educational Qualification Frequency
2%
2%

0
28
no.of respondent

30 22
20 1
10 42% 2
1 1
0 3

1 2 3 4 5 6 7 8
54%
1 2 3 4 5 6 7 8 9 10 4
catagory of education

Inference:

The above result reveal that majority of respondents (22+28)% were either
uneducated or educated only up to primary level
Table 4: No. of family members Chart 4:
family size freq
0%

30
no.of respondent

20 1
f req
45% 2
10

0
55% 3
1 2 3 4 5 6 7 8 9 10 4
age catagory

Inference:

Above result reveals that majority of respondent 55% live with joint family
or have big size of family

Table 5: No. of earning member Chart 5:

Series1 2% freq
earning member
Series2 4%
Series3
no.of respondent

40 33
30 Series4
16 1
20 Series5 31%
2
10 2 1 Series6
3
0 Series7
63% 4
freq Series8
earning member/family Series9
Series10

Inference:

From the above result it can be clearly seen that about 63% of the
respondent were the only earning member of their family, 31% have 2
earning member because of size of family.
Table 6: Income level Chart 6:
Series1 freq
income level 12%
Series2
30 Series3
no.of respondent

24 22
Series4
20
Series5 46% 1
10 6
Series6 2
0 Series7 3
freq Series8 42%
incom e catagory Series9
Series10

Inference:

The above result reveals that 46% of respondent have income level 1 while
42% and 12% have income level 2 and 3 respectively.

Table 7: Account Holder Chart 7:

account map freq
15%
40 33
no.of account

30
holder

20 11 1
8
10 2
21%
0
3
1 2 3 4 5 6 7 8 9 10 64%
no.of account

Inference:

The above result reveals that 64% of respondent don’t have any account any
where while 36% have their own bank or post office account.
Table 8: Background Chart 8:
background freq
19%

40 36
no.of respondent

30
20 1
10 12%
10 6 2
0 3
1 2 3 4 5 6 7 8 9 10 69%
background catagory

Inference:

The above result reveals that majority of respondent belong to the

background of type 3(69%), then type 1 (19%) and type 2(12%).

Table 9: No. of dependent Chart 9:

dependent members freq
12% 8%
20 18
15 16%
respondent

15 1
10 8
6 2
4
5 3
29%
0 4
1 2 3 4 5 6 7 8 9 10
5
no. of de pendent/family
35%

Inference:

The above result reveal that majority of respondent (35+29)% have no. of
dependent more than 1 and less than 4. 16% have only 1 dependent and
12%have 4 or more than 4 dependent in their family.
Table 10: Whether has ID proof Chart 10:
ID proof freq 1
2
27.5 27 0%
27 3
no.of respondent

26.5 4
26
48%
5
25.5 25
25 52% 6
24.5 7
24
8
1 2 3 4 5 6 7 8 9 10
9
1-yes ,2-no
10

Inference:

Above result reveals that 52% have ID proof but almost there were equal no
that hadn’t any id proof.

Table 11: Faced prob with health or asset Chart 11:

health/asset problem faced Freq
23%
60
40
responses

40
20 12 1
2
0
1 2 3 4 5 6 7 8 9 10
1-yes, 2-no 77%

Inference:

Above result shows that 23% of respondent didn’t face any problem related
with health or asset but 77% faced a serious health of asset loss in past of
their life.
Table 12: If yes how they managed Chart 12:
monetory management way of monetary management
19
20 2%
15 21%
15 1
response

10 40%
10 2
3
5 1 3
0 6% 4
1 2 3 4 5
5
w ay of m anage 31%

Inference:

The above result reveals that majority of the respondent 40% managed their
financial problem by way 1, 31% by way2 and 21% by way4 and rest
managed their problem by pattern of ways shown above in chart12.

Table 13: How many times fell ill Chart 13:

illness illness map
7%
28
30
26%
response

20
11 1
10 3 2
0 3
67%
1 2 3 4 5 6 7 8 9 10
times fell ill/month

Inference:

The result above reveals that 67% of the respondent don’t have serious
health problem and they hardly use to fell ill once in a month. But beside of
this some sector 26% and 7% respectively are those who use to fall twice or
thrice in month.
Table 14: Risk on job Chart 14:
risk on job
risk on job

28
27
27 48%
response

26 1
25
25 52% 2
24
1 2 3 4 5 6 7 8 9 10
1-yes, 2-no

Inference:

The above result reveals that 52% of the respondent didn’t had any risk on
job but almost equal proportion 48% who had serious job risk.

Table 15: Risk toward assets Chart 15:

risk toward asset risk toward asset

40 35
33%
30
response

17
20
1
10
2
0 67%
1 2 3 4 5 6 7 8 9 10
1-ye s, 2-no

Inference:

Above result reveals that a majority of respondent 67% don’t have any risk
toward their asset while 33% were those who have. Reason might be
because of their low income they hadn’t had any significant asset.
Table 16: Awareness about insurance Chart 16:
awareness about insurance awareness about insurance
8%
60 48
response

40

20 1
4
2
0
1 2 3 4 5 6 7 8 9 10
1-ye s, 2-no
92%

Inference:

Above result reveals that majority of respondent 92% were aware of

insurance but 8% were also there who even didn’t know what the insurance
is.

Table 17: Source of information Chart 17:

source of information source of information
0%
1% 11%
11%
1%
0%
30 25 3%
22
responses

20
8 8
10 5
1 0 2 0 1
0 35% 31%
1 2 3 4 5 6 7 8 9 10
source
7%

Inference:

The result above reveals that 35% of the respondent got the information
about insurance from source 7, 31% got info. from source 5 and remaining
from the source pattern shown above.
Table 18: No. of insurance taken Chart 18:
insurance taken insurance tak en

2%
40 31
30 38%
responses

20
20 1
10 1 60% 2
0 3
1 2 3 4 5 6 7 8 9 10
no.of insurance taken

Inference:

Above shown result reveals that a majority of respondent 60% were not
insured from any where , 38% had taken life insurance but 2% were also
there who were very well awared and had 2 or more than 2 insurance.

Table 19: Why not insured? Chart 19:

reason for no insurance reason for no insurance

20 17 16
41% 44%
responses

15
10 1
6
5 2

0 3
15%
1 2 3 4 5 6 7 8 9 10
reason

Inference:

The result got above reveals that 44% were not insured because of reason1,
41% because of reason3 and 15% were not insured because of reason 2.
Table 20: Kind of insurance like to purchase Chart 20:
insurance like to have insurance like to have
9%
30 27

18 14%
responses

20
1
8
10 5 46% 2
0 3
1 2 3 4 5 6 7 8 9 10 4
type of ins urance
31%

Inference:
Above result reveals that 46% of respondent like to have life insurance, 31%
like to have health insurance but there are some 14% who are awared toward
their child education and like to have education insurance, while some 9%
want to minimize risk toward their assets and like to have asset insurance as
well.

Table 21: Premium ready to pay Chart 21:

premium map p re miu m map

20 27% 24%
15 14
15 12
responses

10 1
10 2
5 3
0
20% 29% 4
1 2 3 4 5 6 7 8 9 10
type of prem ium

Inference:
Above result reveals that in this particular sector all the respondent were
almost have equally distributed opinion about premium package. 24% were
ready to pay a sound premium, majority were aligned toward premium
package 2, 20% were ready to pay premium 3, while 27% agreed to pay
premium package 4.
Table 22: How many members like to insured Chart 22:
members like to be insured members like to be insured

40 2%
31 2%
30 2% 1
responses

35%
18 2
20
3
10 4
1 1 1
0 59% 5
1 2 3 4 5 6 7 8 9 10
members/family

Inference:
The above shown result reveals that majority of respondent 59% like to
insured two members of their family apart from self but 35% were those
who can’t bear even so less premium of micro insurance product and like to
insure only one member apart from self rest are distributed as shown above.

Table 23: From where you like to Chart 23:

Purchase Ins. Policy
facility location facility location

40 36
9% 0% 7% 1
4%
responses

30 2
16%
20 3
9
10 4 5
0 2 4
0
64% 5
1 2 3 4 5 6 7 8 9 10
6
location catagory

Inference:
The result above reveals that a majority of respondent 64% believes on
facility location 3 and likes to have insurance from there, 16% believe on
facility location 4 and rest are shown above.

Table 24: Insurance Duration Chart 24:

insurance duration insurance duration

21%
25 29%
20
20 1
15
15 2
11
10 3
6
5 12% 4
38%
0
1 2 3 4 5 6 7 8 9 10

Inference:

The result found above reveals that a majority of respondent 38% like the
insurance for the duration of 5-10 years, 29% up to 15-20 years, 12% up to
10-15 years but some were also those 21% who can’t bear even so less
premium and want to have insurance policy up to duration of 0-5 years.

FINDINGS
• Study reveals that majority of people whose daily income is less than
100 bugs have big family
• Earning member in majority of family is only male.
• Income level lies between 100-200 bugs per day
• Majority of respondent didn’t had any saving account because of no
ID proof
• Majority of respondent have more spending on travel & rent, after that
on food & cloth and Medicare & entertainment
• Majority of respondent are the only earning member in family size of
5-8.
• Majority of respondent hadn’t significant asset
• Majority of them managed critical financial problem from some
lender like master of their service
• They hadn’t any significant job risk but yes they had asset loss risk
• Many of them aware about insurance but not of micro insurance and
best source of information medium found to be “Radio” and
“advertisement banners”.
• Many of respondents were not insured just because of either high
premium or lack of complete information.
• Some complaint about bad approachability of insurance provider
company to them as well.
• Majority of respondent shows keen interest in micro-insurance policy
in life and health , some were very sensitive toward education and like
to have education insurance as well
• Because of low income they are ready to pay 150-200 bugs per year
for insurance and like to have at least one more member of their
family to be insured
• They are ready to pay premium 15-20 years.
 CONCLUSION

From the above statistical

interpretation it could be concluded
that potential lies in the society.
There is a large segment of the
population whose income level lies
under the boundary line of poverty
and since micro insurance target to
those people whose income level is
even less than 100 bugs per day, it
can penetrate population very well.
Many of our target segments have
recommended many other facilities
with micro insurance which found to
be really concern able. Micro
insurance product should be
manufactured in such a way that
those respondents who had denied
for having insurance for all family
members only just because of
premium, can also get access through
it.
IN THE END:

CONCLUSION

FINDINGS

RECOMMENDATION

ANNEXURE

BIBLIOGRAPHY

WEBSITES