Insurers eye rural areas to revive new business numbers
Shilpy Sinha / Mumbai May 14, 2009, 00:32 IST
After reporting low numbers in new business premium, life insurance companies are resorting to special initiatives to increase business from the rural segment, which they term as emerging markets.
Insurance companies are using various techniques to tap the segment. For instance, Bajaj Allianz Life Insurance Company has put a cap on the size of the policy sold in rural areas to increase sales, while Max New York Life is doing need-based selling.
“Agents are always tempted to sell large-ticket policies due to the high commissions involved. We have capped the ticket size of the policies sold in rural areas to Rs 10,000. This will help them to change their interest in the market, without focusing too much on commissions,” said Bajaj Allianz Life Insurance Managing Director and CEO Kamesh Goyal.
Insurers are betting big on their rural division and have lined up plans to aggressively increase their market share by cost-effective distribution models.
Max New York Life insurance company has asked agents to do need-based selling. After analysing the client’s needs, they customise the products. The private insurer is asking agents to find out how much life insurance one would need in rural areas to cover their needs and provide a policy accordingly.
“We are asking agents to sell policies based on the actual assessment of an individual’s need in the rural segment,” said Max New York Life Executive Vice-President & Head for Emerging Markets, R P Singh.
Most players sell similar policies in urban and rural region. For selling policies in villages, they tie up with district central co-operative banks and regional rural banks, while taking the help of non-government organisations and self-help groups.
“We are designing products to suit the emerging markets, as we have observed that the premium-paying capacity of people residing in rural areas is lower when compared with those residing in the urban part of the country. Also, the mode of payment needs to be flexible,” said Reliance Life President P Nandgopal.
Insurers see a huge scope in rural areas as penetration is dismally low, especially given the fact that the state-owned insurance giant Life Insurance Corporation of India (LIC) accounts for 30 per cent of the total business premium from rural areas.
The news write up has main focus on number of policy and gives optimistic picture of private insurers in future in futurein rural areas(presently privates have failed even to maintain offices in rural areas). Some private insurers have closed their rural branches as they are in losses.When they have only business motive in mind howcan they insure our rual people with social touch.At present LIC gets nearly 70 % number of policies from rural area with smaller ticket size esrving the insurance objective .In fact insurance is sold as LIC even by private in rural areas. Think who serves masses.
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After reporting low numbers in new business premium, life insurance companies are resorting to special initiatives to increase business from the rural segment, which they term as emerging markets.
