TRENDS & STRATEGIES IN AGRICULTURAL SECTOR

SUJITH SASIDHARAN SRM SCHOOL OF MANAGEMENT

OBJECTIVES OF THE STUDY: The primary objective of the study is to know brief insight into ;What micro insurance is Evolution of micro insurance in India Relevance of insurance to the agricultural sector .Recommendations and conclusions

WHAT IS MICRO INSURANCE? Micro insurance is different from other traditional products in the market it being a targeted instrument for inclusive insurance for low income households. It intends to offer the poor protection against risks in return for payment of affordable premiums in ways that support small ticket size; Coverage for the most vital risks; and a responsive and service oriented distribution

THE STRUCTURE AND ENVIRONMENT OF MICRO INSURANCE MICRO LEVEL MESO LEVEL MACRO LEVEL

MACRO LEVEL- THE ENABLING ENVIRONMENT MESO LEVEL- FINANCIAL INFRASTRUCTURE

MICRO LEVEL
POLICY HOLDERS

MICRO INSURANCE SUPPLY CHAIN

REINSU RER

INSURER

DELIVE RYCHA NNEL

POLIC Y HOLD

COVE RED LIVES

PROVIDE INSURANCE TO INSURERS FOR CATASTROP .HIC RISKS

Carries the insurance risk •Pays claims •Receives premiums •Manages regulatory compliance
Multi-national and domestic commercial insurers •Mutual (memberOwned, professionally run) insurers •CBOs •NGOs •Funeral parlors •Informal groups

Sells the• insurance product • May aid clients with, or settle claims •Collects premiums
MFIs and• banks •CBOs •NGOs •Specialty agents •Employers •Governments •Retailers •Churches •Post offices

Buys the product
Those who have a premium paid to cover them Policy holder Spouses Children Group member s with policy

:EXAMPLES Interpolis, AXA re, Swiss re

Individuals• •Groups(churc h members, trade union members, employees)

MICRO INSURANCE PRODUCTS: OPPORTUNITIES &BARRIERS
     

HEALTH MICRO INSURANCE LIFE MICRO INSURANCE PROPERTY MICRO INSURANCE DELIVERY CHANNELS MARKET BARRIERS REGULATORY BARRIERS

:TYPES OF MICRO INSURERS
COMMERCIAL INSURERS  NGOs  MUTUALS  CBOs WHO IS OFFERING MICRO FINANCE?  LIC PIONEERS  ICICI  BAJAJ ALLIANZ

BAJAJ ALLIANZ LIFE LAUNCHES MICRO INSURANCE PRODUCTS
Alp Nivesh Yojana – endowment plan:  Life cover and Maturity benefit equal to sum assured + vested bonus  Guaranteed Surrender Value  Avail additional benefits including Accidental Death Benefit & Accidental Permanent Total / Partial Disability Benefit Bima Kavach Yojana – Most economical term insurance policy  Return of premium on maturity  Guaranteed Surrender Value  Avail additional benefits including Accidental Death Benefit & Accidental Permanent Total / Partial Disability Benefit Jana Vikas Yojana - Pay once for a long term security  Life Cover and Maturity Benefit of 125%of the single premium payable on survival till the end of the policy term.  Guaranteed Surrender Value

THE RELEVANCE OF INSURANCE TO :THE AGRICULTURAL SECTOR

MANAGEMENT

WEATHER
FACTORS AFFECTING CROP GROWTH & YIELD

SOIL

PESTS

AGRONOMIC INPUTS

EVOLUTION OF :MICROINSURANCE IN INDIA
Main Features  Insurance simplified by the regulator for ease of distribution;  No licensing and less stringent training norms (only 25 hours) for micro insurance agents.  Servicing of micro insurance products open to other existing intermediaries also;  Single window policies and service possible as per the regulations and a non-life insurer can tie- up with a life insurer and vice-versa to offer composite insurance product (life and non-life) to the low-income people.  The IRDA regulation allows the MFIs, NGOs and SHGs and these have the potential to become the best ‘Rural Insurance Advisors’ on account of their proximity and

:The comparison
Standard insurance Targeted generally at the urban wealthy or  .middle-class clients  High level of awareness.  Markets are near; accessible and familiar.  Most companies are aware of their specific insurance requirements and bundling not necessary.  Ticket size of premium is high.  Globalized.  Consumer awareness on insurance as a risk management tool is rising. Micro insurance for agriculture Targeted at low-income small and marginal  farmers, some living along or even below .poverty line  Low levels of awareness.  Markets are distant and considered inaccessible due to vast geographical stretch and poor infrastructure and connectivity.  Not insurance/finance literate.  Farmers see insurance as an avoidable means of additional expense with uncertain outcome  Low ticket size.  Localized consumers need vernacular documents

HOW TO MAKE MICROINSURANCE CATER TO THE NEEDS OF THE FARMERS AND YET BE PROFITABLE ?FOR THE INSURER

Simplifying underwriting and claim settlement procedures, introducing easy to understand and easy to market and service new integrated micro insurance products. Making premium payment plans flexible (installment facility)and simplifying premium collection. Designing long-term policies where necessary, to coincide with the loaning. Micro insurance may prove to be most effective if it complements micro finance and the insurance period may be made to coincide with the loaning

:FARMER’S ISSUES
RURAL CHALLENGES

Challenges of Rural Distribution for Micro insurance for Agriculture Insurance Literacy High cost of reaching rural areas Winning trust of farmers Existing incentive structure not lucrative Enough

RECOMMENDATIONS AND CONCLUSION
      

Simplification of products and bundling where requires making them easy to understand, easy to use, sell and service. Simplifying and making premium payment plans flexible to suit farmer needs. Focus on volumes by targeting large groups. Integrating micro finance activities with micro insurance for a most beneficial outcome. Claim settlement to be timely, simple and transparent. Maximizing the benefit of connectivity revolution in rural India to reach the unserved markets. Using additional innovative distribution channels to achieve cost-efficiency in agricultural markets.

?QUERIES