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BASIX Equity for Equity Micro InsuranceEffective Renewal and Participation Rate Presentation by BASIX, 15-Oct-05 1 Contents BASIX Equity for Equity Introduction to BASIX Insurance services at BASIX Participation and Renewal in insurance 2 BASIX Equity for Equity Introduction to BASIX 3 Reach BASIX Equity for Equity • States(8) – Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, Orissa, Jharkhand, Rajasthan • No of Villages(10,393) • No of customer(Direct+Indirect)-0.25 Mn • No of Staff (1,456) 4 BASIX Equity for Equity Dausa & Daulpur 27.Jabalpur 28. Shajapur & Indore 1.Deoghar 25. Jamshedpur 26. Ranchi 29.Bhandara 30.Chandrapur 31.Nanded 32.Parbhani 33.Umerkhed 34. Wardha 35.Yavatmal 21.Aska 22.Berhampur 23. Nayagarh 36.Bellary & KBS Bank (Raichur, Gulbarga) SNFL 1.Adilabad 2.Adoni 3.Anantapur 4.Bhadrachalm 5.Bhainsa 6.Hindupur 7.Hyderabad (Urban Micro Finance) 1.Kadapa 2.Khammam 3.Madhira 1.Nalgonda 2.Nandyal 3.Nirmal 4.Nizamabad 5.Proddutur 16. Ramayampet 17. Siddipet 18. Srikakulam 19. Suryapet 20. Vikarabad & KBS Bank (Mahabubnagar) 5 The need for Insurance BASIX Equity for Equity • IMRB study – Impact of micro-credit – Increase in borrower income, asset ownership and social participation in a small way – Customer satisfaction on service and terms high – Credit alone has limited impact on livelihoods – Issues: Unmanaged risk and low productivity and low price realisation • Review of strategy: – Add risk mitigation services (insurance, derivatives, no-financial .e.g. vaccination) – Ag/business development services for productivity enhancement, value addition and market linkages 6 BASIX Equity for Equity Insurance services at BASIX 7 Addressing risks through BASIX Equity for Equity • Risk mitigation services like – preventive vaccination for livestock – integrated pest management (IPM) practices for crops • Risk management services – Insurance – Derivatives 8 Insurance-Products BASIX Policies Since As on 30-Sep-05 Avg Sum Insured (Rs) Lives under Policy Group Oct-2002 1,30,000 15,000 Lives under: Policies Retail Dec-2003 13,000 22,000 Health Insurance Customers May-2005 64,000 36,500 Livestock Insured Oct-2002 13,000 8,000 Rainfall Ins customers June-2003 7,000 5000 Equity for Equity 9 Insurance-Service Performance as on 30-Sep-05 BASIX Claims Settled Settled amount Rs Life 307 40,00,000 Livestock 357 27,00,000 Health 6 Rainfall 305 4,50,000 Total 975 71,59,000 Equity for Equity 9,000 10 back Insurance Business Model BASIX Equity for Equity Distribute Insurance Offer products Insurer BASIX Inputs for products Rural Customer Feedback on needs 11 Support for insurance services BASIX Equity for Equity • BASIX has – 120 professionally qualified (MBAs and M.ScAg) specified persons to sell insurance – business relationships with 3 insurance companies – online MIS 12 BASIX Equity for Equity Participation and Renewal in insurance 13 The formula? BASIX Equity for Equity (Participation, Renewal) = fn(1.customer education 2.incentive to the channel, 3.effective MIS 4.simplicity of product and process 5.channel depth and efficiency, 6.communication, 7.service quality, 8.pricing) 14 1. Customer Education BASIX Equity for Equity • May not result in an immediate rise in participation • But is an important prerequisite to build the long term market • This task is some times seen as the responsibility of the NGO sector • There is a need for Insurance companies too to invest 15 Educational program on Insurance BASIX Equity for Equity 16 2. Incentives to the channel BASIX Equity for Equity • First level: distribution cost to be covered • Second level: service cost to be covered • Third level: +ve contribution to distribution channel • Case of high lapsation in rural life insurance policies in the absence of the above 17 3. Effective MIS BASIX Equity for Equity • Need for design of MIS specific to channel • Insurance co’s MIS is sometimes frozen to past business practices • e.g. inability of insurance co to provide information at a disaggregate level • Business model should dictate the MIS. MIS capacity should not dictate the business model 18 4. Simplicity in product and process BASIX Equity for Equity • Convenience in premium remittance • Flexible renewal premium payment in Life Insurance • Keep fine print and exclusions to the minimum • Minimal documentation • Simplicity is necessary not only to increase comfort to customer but also to the field advisor 19 5. Channel depth and efficiency • It still has to be sold! BASIX Equity for Equity • Therefore overall performance is still dependent on the ability of the sellers than on the customers • Ability to reach the last mile is still the challenge • To reach and service the last mile in a cost effective manner needs innovations in business processes. 20 6. Communication BASIX Equity for Equity • Most promotional literature still happens in English • Need for providing product literature, proposal forms and policy contract notes in different vernacular languages 21 7. Service BASIX Equity for Equity • Early intimation of renewal • Assistance in the event of claim • Rationalise claim documentation • Prompt claim settlement • A happy customer provides the best marketing advantage 22 Rainfall insurance claim settlements in Nov-04 BASIX Equity for Equity 23 8. Pricing BASIX Equity for Equity • Tendency/Advocacy to price rural products below cost-Vicious cycle • In a Free/Near Free lunch, service can neither be demanded nor delivered • E.g-Crop Insurance 24 Pricing BASIX Equity for Equity • Products priced in a sustainable manner creates a Virtuous Cycle • Service will be demanded • Creates scope for continuous product and service improvement • Role for subsidy: training, capacity building, implementing operational systems and MIS. 25 BASIX Equity for Equity Thank You www.basixindia.com [email protected] 26