Private Insurers Pull Out All Stops For Rural Gains
Private insurance companies are going all out to make inroads into the rural markets. According to a recent survey of the insurance sector by the Federation of Indian Chambers of Commerce and Industry, almost all insurers have introduced products targeted specifically for rural areas.
As many as 52 per cent of the companies surveyed said the launch of products in rural markets met with an encouraging response. But the companies still have a long way to go as 82 per cent of the respondents felt that enough has not been done to tap the potential in the segment.
The Insurance Regulatory Development Authority has stipulated that for life insurance companies, at least 5 per cent of the total business should come from rural areas, and this figure should increase to 15 per cent in the coming years. In case of general insurance, companies should increase their rural business from 2 per cent in the first year to 5 per cent in the third year.
Private insurers are also working hard to increase their acceptability in the rural areas. Almost 48 per cent of the respondents felt that they were acceptable in the rural areas, while 43 per cent felt that they were not acceptable.
The respondents felt that in order to gain acceptability in the rural sector, innovative products and distribution strategies need to be introduced.
As many as 65 per cent of the respondents said that problems in distribution and networking of agents will effect growth of insurance in rural areas to a large extent.
Almost 61 per cent felt that lack of adequate infrastructure in rural areas was also a major hindrance. Around 74 per cent of the respondents felt that there is a lack of awareness regarding insurance in rural areas.
The survey also reveals that as many as 96 per cent of the respondents feel that the passing of the Insurance Amendment Bill will promote growth of insurance.
As many as 75 per cent of the respondents felt that removal of tax sops in the budget may help in the long run in changing the mindset of consumers of buying life insurance products as a savings instrument rather than a security measure.