INTRODUCTION

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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. According to Micro-insurance Regulations, issued in 2005 by the Indian Insurance Regulatory and Development Authority (IRDA), micro refers to the small financial transaction that each insurance policy generates and it is insurance with low premiums and low caps / coverage. It plays a vital role in the economic development of the rural poor. Micro insurance in emerging economies and developing countries means where people are often most vulnerable to risks such as natural disasters, illness and disease and where there is little or no social security.[1]

REVIEW OF LITERATURE
Historical back ground of Micro- insurance Government of India and certain insurance agencies started this scheme in 1980¶s,but only after in the later years success has been obtained. Though the reach is been very limited among the 10 million population the future is prone to yield high scope. The overall market is estimated to reach 250 billion. TATA AIG was the first private player to enter into this market .This is followed by a number of players like Birla Sun Life, SBI Life Insurance, Bajaj Allianz ,ICICI, Ing Vysya , MetLife etc. Most of these companies focused upon the Life Insurance compared to the non-life insurances . They charged a nominal premium for the various insurance schemes and are able to perform substantially well. 1] Demand of micro insurance The inventory lists 51 schemes that are operational in India. Most schemes are still very young , having started their operations in the last few years. Of the 39 schemes for which this information is available, around 24 schemes came up during the last 4 years and about 7 schemes have operated for a decade 43 schemes with available information cover 5.2 million people 66% micro insurance schemes are linked to micro finance services. 21% are implemented by community based organizations and 12% by health care providers Life and health based insurance are highly demanded. 59% and 57 5% on the overall respectively. 25 % out of the 37 % receive external funds to initiate the schemes, 20 out of the 32 schemes got technical external assistance who manage the insurance activities. The other schemes kept relying on their regular staff while

recognizing them the additional responsibilities linked to the management of the scheme.

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2]Supply of Micro insurance

Out of 80 listed insurance products, 45 (55%) cover only a single risk. The other products covering of risks as a package mostly focus on 2 (20%) or 3(18%) risks coverage. The available products cover a wide range of risks. However, the broad majority of the insurance products cover life (40 products or 52%) or accident-related risks. The health coverage remains very limited (12 products). Most life insurance products (23 out of 42) are addressed to individuals. However, some products may be bought both by individuals and groups. Most life insurance products (55%) have been designed to cover an extended contract duration ranging from 3 to 20 years. Out of 42 life insurance products, 23 are pure risk products. The other 19 products propose various types of maturity benefits. Out of the total 12 health products, 7 products propose the reimbursement of hospitalization expenses while the other 5 have chosen to narrow down the coverage to some specific critical illness.
3] 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. Every model has its own advantage and disadvantage. 
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. 
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. 
Provider-driven model: The service provider and the insurer are the same, i.e., hospitals or

doctors offer policies to individuals or groups. The healthcare provider is the micro-insurance scheme, and similar to the full-service model, is responsible for all operations, delivery, design, 2|P ag e

and service. 
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. 4]Distribution Channels:

The following approaches have emerged in India to provide insurance to low-income populations (only regulated channels are included here, not in-house schemes): 
Partnership Agency

model

model model 

Micro-agent

Partnership model The partner-agent model: As the name implies this model involves a partnership between an insurer and an agent that provides some kind of financial service to large numbers of low-income people. This could be a microfinance organization, an NGO, or a business that supplies precuts to large numbers of low-income people, such as a fertilizer supplier. This party is an agent, selling insurance policies to the clients on behalf of the insurance provider (usually) in exchange for a commission or fee. The insurance provider utilizes the established distribution channels of this agent and its financial transactions with low-income groups, that would otherwise be too costly to set up. The partnership model uses the comparative advantage of each partner so that each can focus on its core business: the insurance provider is responsible for designing and pricing the product, the final claims management, and the investment of reserves, and absorbs all the insurance risks. In addition to selling the policies, the agent offers its infrastructure for product servicing such as marketing the product, premium collection, and assists in claims management. Pros and cons of the partnership model Pros system works better than in-house because the synergies are maximized, enabling both organizations to focus on their core business and expertise; 
With a single partnership agreement it is possible to sell microinsurance to over a quarter of a million lowincome people; Requires Uses The

fewer skills for the agent than an in-house model;

legally recognized insurance companies that have adequate reserves, adhere to capital requirements, employ certified insurance professionals, and operate under the insurance law;
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in particular are often here today. NGO or MFI staff or management may develop sympathy for a client and be lax about underwriting or claims verification. gone tomorrow . policies only would be sold. overhead costs of both the organizations. of interest may occur.Insurer The has access to reinsurance. relying on donor recognition and goodwill for their NGOs survival. The client comes to the agency office for sales and servicing of the product. Cons of the quota system. Pros and cons of the agency model: Pros Does Conflicts not require much additional investment in infrastructure. 4|P ag e . the agent and the insurance company. however. It should be noted that this is less likely to occur with an MFI partner that is used to financial discipline with its lending activities. etc. the most well-known agents are already taken and have existing relationships with insurers. etc. Better Cons Difficult Agents Offices to reach large numbers especially in rural areas where clients may be unwilling to travel to the office.. Because The It insurance provider is dependent on the quality of the agent. control of the quality of the agent than with the partnership model. generally such microinsurance policies have not proved commercially Individual viable. that could act within a partnership. may intimidate poor clients.. Insurers described this model but the authors could find no examples of it operating in practice. Agency model The agency model: How does it work? In this model the insurer uses its normal agency office and sells microinsurance products directly. are reduced: the agent can use its infrastructure for collecting premiums. the insurer provides the expertise on product development. will need special training in dealing with low-income clients. There are still many other organizations. reduces the need to build the capacity of agents such as NGOs and MFIs to sell insurance because the insurer can do some of this. especially when working with non-financial institutions.

the orphaned policies can be taken over by another CRIG that operates under the same NGO. thus mitigating the risk of orphaned policies. The central building blocks of the model are Rural Community Insurance Groups (CRIGs) supervised by rural organizations such as churches.Micro-agent model While the partnership model is relatively common. As mentioned under the partner-agent model. not the legal sense of the term). The leader of the CRIG is licensed as an agent. and this is not possible under the CRIG system. when a claim arises the MFI or NGO investigates the claim. Vijay Artherye. and so their long-term existence is precarious. the micro-agent model described below is unique. Pros and cons of the micro-agent model Pros model creates an insurance distribution infrastructure in low-income neighbourhoods. Because the position is a commercial one with financial incentives. Chances are good that CRIGs. Tata-AIG believes that it will last in the long term. and then claims it back from the insurer. Cons Training In Sustainability: The is costly. This practice reduces training costs. CRIGs are a partnership firm formed of five women from a self-help group (SHG). especially in relation to premium values. The transaction costs of the sales agent are cheap at first but increase as soon as the agent has sold to all the peoples/he knows and needs to sell to strangers. The leader could be replaced by another from the community. In addition. that of micro-agent. the event that a CRIG disbands. specifically an employee of Tata-AIG. pays the benefit immediately. It is the invention of Tata-AIG. 5|P ag e . NGOs and MFIs are often dependent on the goodwill and public recognition of aid flows. being registered firms. with new livelihood opportunities in his/her vicinity. and much more experience is needed before it can be reasonably evaluated. usually organized with the assistance of the rural organization. NGOs or MFIs. This model is new. In many cases in the partnership model. it creates a new profession. and receive training and assistance from Tata-AIG. Immediate payment of claims helps maintain client confidence. in the event of a member or leader dropping out. The CRIG is a de facto brokerage firm (in the technical. All CRIGs in the same geographic area meet in a single centre. especially to those living far away. will survive. facilitating the sale of long-term products.

y Allianz Bajaj Life Insurance Co. y ING Vysya Life Insurance Co. Ltd. y Tata AIG Life Insurance Co. y ICICI Prudential Life Insurance Co.5]MICROINSURANCE PLAYERS IN INDIA: y SBI Life Insurance Co. Ltd. y MetLife India Insurance Co. Ltd. Ltd. Ltd. 6|P ag e . Ltd. y Om Kotak Mahindra Life Insurance Co. Pvt. y Birla Sun Life Insurance Co. Ltd. Ltd. y HDFC Standard Life Insurance Co. Ltd.

) * Weather micro insurance (natural disaster) 7|P ag e . may be offered for a wide variety of risks. These include both health risks (illness. Ltd.y AMP Sanmar Assurance Co. y Life Insurance Corporation of India Bajaj Allianz Product : Alp Nivesh Yojana(Life) url: Jana Vikas Yojana(Life) url: Saral Suraksha Yojana(Life) url: Birla Sun Life Product : Bima Suraksha Super (Life) url: Bima Kavach Yojana(Life) url: Bima Dhan Sanchay(Life) url: SBI LIFE PRODUCT : Grameen Shakthi(Life) url: Grameen Super Suraksha(Life) url: TATA AIG PRODUCT : Ayushman Yojana(Life) url: Navkalyan Yojana(Life) url: Sampoorn Bima Yojana(Life) url: Sumangal Bima Yojana(Life) url: ICICI PRUDENTIAL PRODUCT: Sarv Jana Suraksha(Life) url: 6]MICROINSURANCE PRODUCTS Micro-insurance. etc. Pvt. A wide variety of microinsurance products exist to address these risks. The most frequent micro insurance products are: * Life micro insurance (and retirement saving plans) * Health micro insurance (hospitalization. y Dabur CGU Life Insurance Co. injury. or death) and property risks (damage or loss). (AVIVA) y Max New York Life Insurance Co. maternity. Ltd. primary health care. like regular insurance. Ltd.

Low-income people consistently find demand for risk management tools that could help them cope with 8|P ag e . It is not dependent. livestock. housing.* Disability micro insurance * Crop micro insurance * Property micro insurance assets. because: It is one of the most demanded forms of cover. relatively speaking. It is a relatively low-risk product for the provider. life cover is. It is relatively easy to price compared to other types of insurance. the least difficult to provide. unlike many types of health insurance. Of all insurance types. It is mostly resistant to problems of fraud and moral hazard. Life Micro insurance Life Insurance covers the policy holder and his/her family on the event of death and disability. It is an important measure of financial security for low-income households and the insurance product currently most widely available. on the existence and efficient functioning of other infrastructure like clinics or hospitals.

Life micro-insurance (and retirement savings plans) provides coverage against the financial consequences of old age or of the death of a breadwinner. this market is looking for (1) funds to help the remaining family carry on. and (3) coverage for the outstanding balance of a loan. 9|P ag e . In these cases.financial issues related to the death of a breadwinner. (2) Funds to assist with the funeral and the related ceremonies and customs. if indebted.

laboratory tests. medicines. direct non-medical costs such as costs of transportation.). hospitalization. and indirect costs (opportunity costs). care and cure (fees for consultations. etc. food in case of hospitalization. as ill 10 | P a g e . The financial consequences can take several forms: direct medical costs of prevention.2 Health Micro insurance Health micro-insurance provides coverage against the financial consequences of ill health and maternity.7. delivery.

Health micro-insurance schemes usually cover direct medical costs covering a predetermined list of risks (or health services). to meet the needs and payment capacity of the policyholder y y y y y y Hospitalization only: Hospitalization and outpatient (comprehensive) Limited outpatient/ community health services: Chronic Illnesses HIV/AIDS Preventive health services 11 | P a g e . Very few schemes provide cash benefits (income replacement) in case of ill health or maternity. Health micro insurance offers the promise of helping communities pay for quality healthcare by optimally pooling their own limited resources. Micro insurance schemes provide various levels of coverage by design.health and maternity usually entail a loss of productive time for both patients and caretakers.

economically dependent on agricultural production. whether temporary or permanent.4 Disability Micro insurance Disability micro-insurance provides coverage against the financial consequences of disability. often linked to index insurance. with implications not only for the affected households. Weather or climate Insurance is an agricultural insurance product and like crop insurance. depending on the contract.7. but for the whole rural economy.3 Weather Micro insurance The rural poor. face significant risks to their livelihoods from catastrophic weather events that cause widespread crop failure. 12 | P a g e . 7. 7. Disability is called temporary when the physical loss is reversible and lasts for a limited period of time (generally up to three years) and is permanent when the injury and loss can t be recovered.5 Crop Micro insurance Crop insurance is an agricultural insurance product and covers crops against perils such as hail or fire. Index insurance is an innovation that circumcision many of the fundamental problems that hamper the development of insurance for weather risks in lower income areas.

peril. Agricultural insurance aims to reduce the vulnerability of low-income households faced by natural disasters like drought. but is based on the measurable occurrence of a specific Micro-insurance provides a financial compensation in the case of crop failure generated by uncontrollable adverse events (e. or death of livestock).6 Property Micro insurance Property micro-insurance (assets. livestock. 7. housing) provides coverage against the financial consequences of the damage or loss of personal assets. crop pest). Most livestock insurance schemes insure against a specific peril and can be paid out in the form of a lump sum payment or livestock replacement. theft of belongings. hut micro-insurance against fire.Index instruments are often used for crop insurance to avoid moral hazard risks and is not connected to one particular crop. flood or livestock affecting epidemics.Property and asset insurance covers against damage of property and damage and/or loss of assets in the event of the covered perils. work premises and tools (e.g. 13 | P a g e . drought.g.. Livestock insurance is an agricultural insurance and covers against loss of livestock owned by the policy holder(s).

Max vriksha money back. Sumangal bima.7OtherInsuranceProducts Micro insurance includes many specific products that are adapted to the needs and demands of lowincome households and cover specific risks. Sampoorna bima. Mahila Suraksha Yojana. Easy term. Jeevan aastha. Bima Suraksha Super and Bima Dhan Sanchay. Met Vishwas Grameen Suraksha Navkalyan Yojana. Insurance Company LIC MetLife AVIVA Life TATA AIG Birla Sun life Insurance IFFCO TOKIO Max New York Life Rural Products Anmol jeevan. Jan Swastha Bima and Jan Kalyan Bima. 7]THEORETICAL FRAMEWORK: 14 | P a g e . Ayushman Yojana.7. Max mangal endowment. Max Suraksha. Janata bima Yojana.

NEED OF THE STUDY: As we find that there is a huge potential of rural market which remains untapped. the data obtained through online & Journals are a little older(by 1 year). this study will help the microinsurance companies(banks in particular) to understand the end to end aspect of rural market and microinsurance products already in operation in India. 15 | P a g e . OBJECTIVE OF THE STUDY: TO OBTAIN A CLEAR PICTURE OF PATH DOWN THE LINE ATTRIBUTE OF MICROINSURANCE IN INDIA.This study will substantially help them to promote their products by using appropriate strategies for new markets & new products. Since it is a secondary research. TO IDENTIFY THE PROS & CONS OF THE VARIOUS MICROINSURANCE PRODUCTS TO IDENTIFY THE CHALLENGES & TO PROVIDE SUGGESTIONS FOR THE VARIOUS MICROINSURANCE SCHEMES IN INDIA. LIMTATIONS OF THE STUDY: The time taken to complete this study is very less.

This study provides substantial evidence for the huge potential associated with the rural market in India. what data has been adopted.RESEARCH METHODOLOGY: Research Methodology is a way to systematically solve the research problem. the other steps are a smooth fall. 16 | P a g e . RESEARCH DESIGN: Exploratory Research is undertaken. The rural market is a vast potential area and it could be of immense advantage if it is rightly tapped. An almost same scenario existed before 3 decades & the appropriate utilization of the markets enabled the Grameen Bank & a number of microfinance institutions to flourish.magazines. It provides a prominent base for the new entrants since the market is still in the ³Blue Ocean´. The Research enables the existing microinsurance players to understand the current market scenario & to design newer products accordingly & to modify the existing products according to the market needs.Shanmuganathan. UTILITY OR SIGNIFICANCE OF STUDY The research study is a comprehensive MARKET OPPORTUNTITY ANALYSIS(MOA). books and one on one discussion with Mr. This research enables the insurance companies to understand why the growth of microinsurance is a bit slow when compared to the urban insurance schemes SAMPLE DESIGN: The sample design adopted for the study is Non ± Probability Sampling Design. But once the first step is crossed. AREA OF STUDY: INDIA POPULATION: Rural People DATA COLLECTION METHOD: Secondary Data ± Collected through internet.It analyses all the typical attributes of microinsurance & its features in India. how the research problem has been defined. Reliance Territory Manager . why the research has been undertaken. The first step over promotion of microinsurance (To make the rural people understand the significance of microinsurance) is quite a difficult task. journals. why a particular technique of analysis for data has been used.

53 2% 1.5% 42.2 Mn 1.5 Mn 3% 36.50% 12.67% 2008-09 2059. of Prod approved 5 11 6 1 23 2006-07 2007-08 2008-09 2009-10 Total Group Year 2007-08 Premium (INR Mn) Growth rate Propotn of tot New prem Income Number of Policies Growth rate Proportions of New lives covered 2012.65% 17 | P a g e .2% 1.ANALYSIS & INTERPRETATION: PERFORMANCE STATISTICS OF MICROINSURANCE: Year No.70% 12.75 1.

NEW PRODUCTS REGISTERED: 18 | P a g e .

The statistical data indicates that the growth of individual microinsurance is quite significant while the growth of group microinsurance is comparatively low.More of private microinsurance companies are entering the market every year which is a good sign of liberalization.The claims ratio shows that the claims are manageable with the premiums collected from customers. This shows that the microinsurance companies can particularly target individual consumers since group insurance requires complex monitoring procedures. 19 | P a g e .

20 | P a g e 20 18 16 14 12 Value (Rs. in Mn) 10 8 6 4 2 Bajaj Allianz Ing Vysya Reliance Life 0 SBI Life TATA AIG HDFC Standard ICICI Prudential 2001-02 Birla SunLife MICROINSURANCE PERFORMANCE BY DIFFERENT COMPANIES: Aviva Kotak Mahindra Max New York Metlife LIC Achieved Target Target Achieved .

in Mn) 20 15 10 5 Bajaj Allianz Ing Vysya Reliance Life 0 SBI Life TATA AIG HDFC Standard ICICI Prudential Birla SunLife 2008 .09 Aviva Kotak Mahindra Max New York Metlife LIC Achieved Target Target Achieved .21 | P a g e 40 35 30 25 Value(Rs.

2001-02 2008-09 22 | P a g e .

23 | P a g e 3 2 1 Royal Sundaram TATA AIG 0 Reliance IFFCO TOKIO ICICI Lombard Bajaj Allianz New India National United India Oriental Health Insurers Star Health Apollo DKV Achieved Target Target Achieved Value in Mn(Rs) 7 6 5 4 Rural Sector Business(non-life) 2001-02 .

24 | P a g e 6 4 2 Royal Sundaram TATA AIG Reliance IFFCO TOKIO ICICI Lombard 0 Bajaj Allianz New India National United India Oriental Health Insurers Star Health Apollo DKV Achieved Target Target Achieved Value in Mn(Rs) 14 12 10 8 Rural Sector Business(Non-life) 2008-09 .

02 (PUBLIC PLAYERS) 2008-09(PRIVATE PLAYERS) 25 | P a g e .2001-02(PRIVATE PLAYERS) 2001.

education. Weak distribution channels.2008-09(PRIVATE PLAYERS) Challenges in marketing of micro insurance products: THE MAIN CHALLENGE IS THE COVER UP THESE TO BASE DRAWBACKS AND CATER TO THIS SEGMENT OF INDIA. There are many companies who have taken this obligation by IRDA positive spirit and have made one attempt to cater to this content of the society. One of the suggestions may be imposing in these companies if they don t to this section of the society. 26 | P a g e . It s been seen that most of the companies don t get involved in the micro-insurance because they feel that poor would not be able to afford and also the margin being involved. There had been many possible solutions given to the government IRDA to make these companies in the micro-insurance. The challenges in Marketing of Insurance in the present scenario may be perceived: Poor comprehension of insurance in terms of the key benefit and the process. Stoic belief in fate coupled with apathetic attitude and language barriers. cost of reaching individual client may be relatively high compared to the existing commission structure. There had been many companies who have not come to the idea that they are very margins in the rural section of the society and they have actually in out ways to cater to these have been able to reach huge margins. Cumbersome Processes. and information in our rural sector. inaccessibility of the agent. Lack of promotion.

an experience of covering more than 50. it began its initiative to provide life insurance cover to customers who took micro credit. making insurance services available to them becomes a key strategy to ensue ensure that sustainable social protection is offered to these households. the insurance company priced the product conservatively at Rs. BASIX & AVIVA could reduce the premium rate by more than 50% in a three year period. 8. provided both financial and technical assistance services to about half a million households spread over eight states in India. While enabling regulations are in place and several insurance companies are in operations in India.6. there is also the challenge of educating the vast majority of population on insurance that has to be addressed. Therefore.000 person years was completed. over 100. By the end of September.000 person years were covered cumulatively.62 per thousand sum insured. and also add a limited health insurance cover from Royal Sundaram as the premium was much more affordable now. agriculture. In the past five years it has settled claims to over 13.Inclusive growth is now recognized as a necessary condition to ensure long term sustainability of growth in India.98 per thousand sum insured.89 per thousand sum insured. BASIX insured over 500. and non-farm enterprises. BASIX. 2007. BASIX has already taken some initiatives in improving the access to micro-insurance for the poor. it is the 27 | P a g e . In partnership with insurance companies. allows in the long run adding more value to the small premiums paid by its customers. there is still a need for innovation in products and distribution system/channels for ensuring the penetration of microinsurance to the masses that need it. BASIX today offers a wide range of micro-insurance products covering life & health risks and also various assets in rural areas like livestock.5 times the loan amount taken by him/her during the loan tenor. In the absence of any past experience of mortality for the customer profile served by BASIX. The rural and social sector obligations and the micro-insurance regulations from IRDA are definitely the important steps in the direction of ensuring financial inclusion and social protection for the poor.000 households amounting to over Rs.50 million. Bringing in financial inclusion for the poor. rural and socially disadvantaged sections of the society is now a major thrust area for policy interventions. That has given a boom year later in 2005. More than any other marketing effort. The claims experience gained till then allowed the insurance company to reduce the premium rate to Rs. And along the way. Based on actual performance of the product. Now the positive performance of product by this stage allowed the insurance company to lower the premium rate to Rs. By October 2004. In October 2002. BASIX took a group policy called Credit Plus from AVIVA which covered its borrower for 1. combined with proper administration of the products. The vulnerability of this category of households is very high to various risks related to their lives and livelihood activities. a livelihood promotion institute was set up long back in 1996.000 individuals under this micro-insurance policy and it s to cover over one million lives within the next one year. This experience proved that a sustainable approach to pricing of micro-insurance. 3. This further allowed BASIX to extend cover to the spouses of the borrowers. Another unique feature which was introduced in this group product was that it provided the borrowers the convenience to pay the insurance premium in small monthly installments to the insurance company along with their loan repayments.

2. Market research of the risks faced by the poor has to be done so that the actual demand of the insurance can be assessed. Munich Re and Swiss Re and GUC of India are examples of reinsures who have been actively studying and promoting micro-insurance in the Indian insurance market. Reinsurers would be in a position to absorb the risks in micro-insurance programs is still in a nascent stage. 28 | P a g e . This translates into absence of data regarding frequencies of various risks faced by them. This marginal risk too can be mitigated by taking a conservative approach to pricing of the micro-insurance policies in the inception years and in reviewing the price. insurance companies are often constrained to offer products as the availability of historical data is critical to the design of insurance products. To break this deadlock. This data and coupled with it. rather than searching for actuarial data for gathering microinsurance started. In the absence of this data. the experience in administrating micro-insurance policies would save as an asset for the insurance companies to expand their market in the huge and untapped rural market. This not only will spread the awareness about various insurance schemes available but will also help the insurers to actually know the kind of risks these people are facing. Main Challenges: 1. in order to expand the overall insurance market size. insurance companies should be willing to introduce products even in the absence of adequate actuarial data. Suggestions:How to overcome the challenges: It indicated that micro-insurance initiatives can definitely alter the picture of low insurance penetration in rural areas in India in immediate future but obviously there are certain challenges to be overcome to achieve sustainable and scalable micro-insurance. The incentives for doing in this would be: It would help to build data on various risks for this segment of the market which is huge.demonstration effect created by the settlement of these claims that helps BASIX to enroll more number of customers for micro-insurance. by ceding a portion of micro-insurance risks to global reinsurers. The willingness and the interest of these reinsurers provide an opportunity to local insurance companies to enter into the microinsurance market. based in actual claims experience in subsequent years. Most poor have not had access to insurance in the past as in the present. This perpetuates the problem of making available insurance products to the poor. The marginal error in pricing micro-insurance policies in the absence of historical data would not seriously affect the insurance companies as the financial value of the risk in micro-insurance policies is very marginal compared to the traditional high value insurance companies. If rural people are already using some of the insurance products then the insurers should also try to know the satisfaction level of the existing products they are using. Reinsures are also beginning to recognize the potential of micro-insurance.

8. 4. Basket coverage III. 29 | P a g e . Simplicity II. there are no frills. Simplicity Micro insurance benefits are kept simple for the following reasons: a. Benefits in cash or in kind IV. Cash. The amount of premium to be paid should be set according to the income these people receive or the mode of premium payment should match their mode of receiving income. To make the scheme simple for policyholders.com March±April. Claim cheques should be distributed at publicly held functions to create awareness of insurance. hence most of the micro insurance schemes are kept simple and easy to understand.Back Benefits I. The schemes and advertisements should be displayed on the village walls that too in local language. Since. devoid of any complicated package.economic imprint 5.g. Insurance companies should tie up with rural retail chain distributors for the distribution of insurance products. 2009 8 socio . indiastat. target population is often illiterate/uneducated and there is lack of awareness about insurance. c. MICRO INSURANCE BENEFITS: Following are the broad benefits of micro insurance I. Panchayts and local groups should be involved at the time of claim payment as well as in educating people. b. For e. 6.: MetLife has tied up with Hyderabad based µVishwas¶ retail distributor for the easy ad fast distribution of products.3. Premiums are to be kept low and administrative cost should also be kept low so that the beneficiaries of the schemes may reap the benefits of scheme.attached to micro insurance scheme/product. The insurers should try to make products according to the demand of customers (low income group). 7. if it is not so then the new product will not attract them.

In some of the life insurance policies.It also poses the question of should the health insurance product be made compulsory and how can government intervene to provide the insurance benefit to the poor at an affordable cost c) Absence of a robust MIS to track details related to insured family members d) Lack of competence on the part of the MFI to monitor the cases. The insurer uses this amount to pay annuities and only after the death of the life assured are lump sum payments made to nominees. Basket Coverage: In India. without recognizing the importance of having enjoyed the security and protection. there is trend towards basket coverage whereby a number of benefits are thrown into one integrated insurance policy. benefits are always paid in cash. IV. Cash Back Benefits: Generally. e) Inability of the MFIs to keep a track of the different documents related to health insurance claims 30 | P a g e .II. Bundled product delivers a more comprehensive risk protection package while reducing expenses since marginal costs of additional benefits are minimal. VIMO SEWA S product covers death. III. which is perhaps the world s most sophisticated micro insurance market. lump sum payment of sum insured is deferred. policyholders perceive insurance premium as unavoidable expenses if they pay premium for a long time without receiving any benefit in return. DISADVANTAGES OF MICROINSURANCE: a) High cost of Health insurance product as compared to life insurance product b) Lack of interest among the members to buy a health insurance product . Benefit in cash or in kind: Health care benefits are either reimbursed to policyholders (in cash) or in some cases some insurers are using third party or cashless payment system whereby the micro insurer pays the health care provider directly. or 5yrs). To address this problem some features may be added to long term product such as: Product Design for Micro InsuranceMicro Insurance a. some instalments are paid to policyholders after regular interval say after (4 yrs. For example. in life insurance policies which have long term maturity period.hospitalization and asset loss benefits that come from two different insurance companies into one comprehensive product. Money back policies: Generally. instead. b. Hence. Theses are generally called survival benefits.For life insurance. at the time of maturity of policy. here the insured does not have to pay anything from his pocket. or premiums are returned and even then insurance is kept alive so long as the policyholder survives. Sometimes sum assured are paid to policyholders at the time of maturity.

Also they have the assumption that insurance is a status symbol and it can only be afforded by the rich people. So insurance institutions will have to take the initiative not only to remove these misconceptions but in providing more attractive. 31 | P a g e . They don¶t prefer giving a good chunk of their income to the insurance people to hedge themselves against the unknown and uncertain future risk.f) Lack of technical competence of the MFI to understand the treatment for the illness involved which might be inflated to increase the cost of treatment g) Lack of proper awareness among the MFIs members about the inclusions and exclusions of the health insurance product h) The tendency of the MFI members of get benefit of each rupees spent in paying the insurance premium i) In case of absence of networking hospitals . useful and more affordable options. it might take long time to get a approval from the insurance companies CONCLUSION The awareness of insurance products available among the low income groups is very low. This can be done only by overcoming the obstacles and increasing the awareness about micro insurance which is a boon for low income people.

com/Presentation/aSGuest8311-128927-microinsuranceentertainment-ppt-powerpoint/ http://bajajallianz.org/cm_data/Michael_Anthony.pdf http://www.Insurance Times.com/Corp/life/micro-jana-vikas-yojana.mats/micro-insurance http://www.slideshare.Life Insurance .org/ http://www.authorstream.wikipedia. June 2009 Issue August 2009 Issue URL LINKS http://en.jsp http://bajajallianz.com/Corp/life/micro-saral-suraksha-yojana.org/UI/Home.pdf 32 | P a g e .nabard.net/akki.org/pdf/report_financial/Chap_XI.microinsurancecentre.microfinanceforum.microinsuranceacademy.com/Corp/life/micro-alp-nivesh-yojana.REFERENCE Journals: 1.org/wiki/Microinsurance http://www. June 2009 Issue March 2010 Issue 3.Insurance Chronicle .jsp http://www.jsp http://bajajallianz.April 2005 Issue May 2005 Issue February 2006 Issue 2.aspx http://www.

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