Insurance firms urged to explore hinterlands
Former chairman of the Insurance Regulatory and Development Authority (Irda) N Rangachary has called for focused efforts on the part of the regulatory authority and the government to promote rural insurance. Rangachary is currently the advisor to Andhra Pradesh chief minister Y S Rajasekhara Reddy.
“Irda is a development authority as well. So the efforts for developing rural insurance market need to come from the state and the authority,” Rangachary said at a seminar on rural insurance organised by the Rural Marketing Agencies Association of India in Hyderabad.
Stating that the current remuneration levels do not spur agents to sell insurance products in rural areas, Rangachary said insurers should evolve a new business strategy.
“Companies should formulate a comprehensive product for rural areas covering quality of agricultural seeds, monsoon failures and loss of productivity apart from credit and health. Companies should realise that community or group insurance is the only practical approach to tap the rural markets,” he said.
Rangachary criticised the non-governmental organisations (NGOs) for acting as distribution agencies to sell health cover and demanding huge commissions. “Contrary to popular belief, NGOs are not the cheapest chain for distribution of insurance,” he added.
According to Bipul Chatterjee, head (rural), Birla Sun Life Insurance Company, they are in the process of building a sustainable model for rural insurance as 41 per cent of India’s middle-class is in rural areas.
The company is planning to expand its reach this year to 116 locations from 67 across the country. Considering rural insurance as an opportunity rather than an obligation, Pawan Verma, head (rural and social business), Reliance Life Insurance, said that innovative ideas like collecting premium only during the harvest season from farmers could help in promoting insurance among rural folk.