According to recent trends in the insurance sector, companies are now looking to tap the vast, mostly untapped markets in the rural and semi-urban areas.
In the last few months, at least five of the 14 private insurance firms have made significant investments in their rural distribution network and tie-ups.
"This year, we are targeting 18 per cent of our businesses in rural areas. In the past six months, we have partnered with 10 NGOs to reach the rural consumer," said Tarun Chugh, head, rural and group business, ICICI Prudential Life Insurance.
Last year the company sold 16 per cent of its policies in the rural areas. The sector's biggest player, Life Insurance Corporation, which owns 75 per cent of the total life insurance market gets nearly 25 per cent of its business from the rural areas.
In 2004-05, it generated Rs 46,037.01 crore (Rs 460.37 billion) worth of business from the rural segment selling more than 55,03,283 policies.
Private firms like Bajaj Allianz, Max New York, Mahindra Finance and Aviva are not far behind. "We have set up more than 300 branches in the semi urban and rural areas in the last one year and are planning to open 100 more in the next 6 months," said Sanjay Jain, marketing head, Bajaj Allianz Life Insurance.
Its current tie up with seven regional rural banks along with Syndicate Bank has made its products more accessible. Jain added that 45-50 per cent of the business came from rural areas in the previous year.
"We have 31 offices in semi-urban and rural areas. We opened 15 such offices last year and also tied up with the Thar Aanchlik Grameen Bank, which has 66 branches in Jodhpur, Jaisalmer and Barmer in Rajasthan," said R P Singh, head of rural business for Max New York Life Insurance.
After exploiting the rural potential in Punjab, Max New York Life Insurance is now eyeing other locations.
"Mahindra Finance distributed 30,000 insurance policies in rural areas last year. It has tied up with Om Kotak, ICICI, Bajaj and all the four PSU insurers. We are using rural network to further tap this market," said Mahindra Finance Managing Director Ramesh G Iyer.
Aviva has partnerships with MFIs like BASIX and SEWA for providing micro insurance. "We have also tied up with 11 co-operative banks recently and so far, we have covered more than 3,50,000 lives in rural areas,' Vivek Khanna, director, marketing, Life Insurance said.
The sector's regulator, Insurance Regulatory and Development Authority, has also taken initiative to tap the rural markets. It came up with guidelines that allow insurer to sell micro-insurance products through NGOs, Micro Finance Institutions and Self Help Groups.
It has also made it mandatory for companies to sell a certain number of policies in the rural areas as well as insure a certain number of lives in the social sector every year.
Cover up
- In the last few months private insurances firms have made significant investments in their rural distribution network and tie-ups
- In 2004-05, LIC generated Rs 46,037.01 crore worth of business from the rural segment selling more than 55,03,283 policies
- Bajaj Allianz has set up more than 300 branches in rural areas in the last one year. It plans to set up 100 more in 6 months
- Max New York life Insurance has 31 offices in rural areas. It opened 15 such offices last year
