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A sunshine industry
Insurance has been operational in India for almost 150 years. Despite this long history, penetration levels for insurance products, especially non-life remains marginal.

For 50 per cent of rural households in India, life insurance is for death and motor insurance is for theft. Cars were a luxury in 1970s and mobiles in the 1990s. Today they have become household goods. Why not general insurance is the question industry is pondering.

Excerpts from views of Milind Kharat, CMD-United India Insurance, Amarnath  Ananthanarayanan, CEO and MD-BhartiAxa General Insurance and B J Sarma, MD and CEO-SBI General Insurance.


IE: What is the current awareness level and your plans to increase awareness among public?

Milind Kharat, UII (MK): General Insurance penetration is very low at 0.7 per cent with an increase of just 0.1 per cent over the last decade. Such very low level of penetration is due to the faster increase in GDP growth in recent years than rise in GI premium incomes. Secondly, with de-tariffing premium incomes were coming down. Unlike life, awareness of general insurance is low, particularly in rural areas. We are opening one man offices in rural areas. We are also tying up with business correspondents and with community service centers to spread the message of insurance. We have adopted 75 schools and help teach insurance and road safety.

Amarnath Ananthanarayanan, BhartiAxaGI (AA): GI penetration is low: the average world penetration of 3.0 per cent. There are several factors responsible for this including low consumer preference, untapped rural markets and constrained distribution channels.

    Our vision is to make insurance available even to the under-served segments. Two key contributing factors to increase penetration are creating awareness and value proposition. Secondly, creating low cost distribution channels to reach rural masses. We have tailor made products and work with NGOs and micro-insurance organisation to penetrate into smaller towns.

    We are witnessing a surge in online business and it has become the ‘go-to’ medium to widen customer reach, especially in the urban and semi-urban segments. Keeping this in mind, we have fine-tuned our website www.bharti-axagi.co.in to enable easy and transparent transactions. E-commerce as a medium will boost insurance penetration by widening access to insurance across the country, irrespective of physical presence.


B J Sharma, SBI GI(BJS): Industry body surveys show difference in the awareness levels in rural and urban areas. The urban areas awareness levels of motor, health and property insurance are on the rise: Motor insurance spontaneous recall was 60 per cent. It was 32 per cent for health and 9 per cent for property.  In rural areas it was 39 per cent for motor, 6 per cent for health and 6 per cent for property. This necessarily requires initiatives at the industry level and cannot be done by one or two companies. IRDA and GIC are running initiatives to enhance the awareness levels. The first burst of the Pan-India Insurance Awareness & Education campaign was completed in April-May, 2013. This focused on reaching the campaign message to the regional audience via major spends focused on regional television  and All India Radio programmes.


IE: Please throw light on Bancassurance.

MK: Bancassurance  is being expanded to increase penetration through bank customers and is focused in rural areas. We have tied up with 58 banks and are trying to increase insurance premiums through these tie-ups. At present a bank sells products of only one insurance company and there is no competition. If they are allowed to sell more than one, competition will increase and customers would benefit.

AA: Banks in India have also promoted general insurance as joint venture companies.  A bank can have a corporate agency tie-up with one life and one general insurance company.

This has now been extended by the regulator to include corporate agency tie-up with a standalone health insurance company as well. In the recent past the regulator has also allowed banks to become insurance brokers. Banks offer GI industry a low cost access to a mass of customers

BJS: Banks dominate the Indian financial scene. With bulk of household savings held in the form of bank deposits banks meet major share of the credit needs of the corporate sector. Banks have a massive branch infrastructure, which can be leveraged for insurance sales. This is indeed happening with most insurers tied up with banks. The share of bancassurance premium in non life industry is small. The key consideration for an insurer in a bancassurance model is how a partnership with a bank can effectively build value for the business through leveraging the bank’s customer base, branch network and its skilled manpower. At the strategic level, the bank’s vision in a bancassurance operation should be to see how effectively the insurance business generates value and thereby favourably impacts the bank’s balance sheet.

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