JOIN US Life insurance companies are increasingly targeting the rural segments to increase business as for the first time since the privatisation of the industry in the year 2000, new premium income has reported a negative growth in the past fiscal year. This was due to the effects of the global slowdown affecting the overall investment sentiments in the Indian urban sector.
The relatively untapped rural markets are getting attention because the potential is huge and the penetration is very low. Talking to Deccan Herald, Aegon Religare Life Insurance Chief Marketing Officer Yateesh Srivastava said, “There has been a large degree of rural prosperity in the past eight to ten years so the market potential is definitely there.”
Various strategies
Insurers have lined up plans to aggressively increase their market share and are also launching cost-effective models to taget this segment. Max New York Life Insurance has asked agents to do need based selling. After analysing the client’s needs, they customise the products.
The insurer is asking agents to find out how much life insurance a person would need to cover their needs and provide a policy accordingly.
“These people have limited resources and want to utilise them in an optimal manner so we provide a policy according to their needs,” said Max New York Life Executive Vice-President & Head for Emerging Markets, R P Singh.
Bajaj Allianz Life Insurance has put a cap on the size of the policy sold in rural areas to increase the number of policies sold so that agents do not focus on large ticket policies due to the high commissions involved.
Bharti AXA Life Insurance Company Chief Executive Officer Nitin Chpora said, “In rural areas we have single premium policies where the charges are relatively low as we have observed that the premium-paying capacity of people residing in rural areas is lower.”
Distribution
One of the reasons for low penetration is fewer mode of distribution and high cost of selling compared to the size of the policies.
Companies, therefore, are now tying up with district central co-operative banks and regional rural banks and also taking the help of non-government organisations and self-help groups for distribution.
“Since distributing on our own will be an expensive we are thinking of keeping relatively prosperous farmers as our agents or distributing through an NGO working in that particular village,” Srivastava said.