Rural Insurance Market – Untapped. Why?

Rural Insurance Market

When it comes to insurance, India, with a population of over 140 million people, is still in its immaturity. Because of its mammoth population, its insurance industry contributes 1.5% of the total accounted global premium earnings.

Regular life and health insurance policies give very little coverage in India. It is due to the fact that more than 70% of the population lives in remote rural areas that have stayed untouched by big competitors in the insurance sector.

Life Insurance coverage in rural India is hardly maintained at 8-10%, while less than 20% of the rural population has one or the other kind of health insurance. In addition, 95% of Indian households do not have any type of property insurance. India has a wide range of geographical and economic disparities, which keep contributing to the country’s poor insurance penetration.

Moreover, numerous internal issues still linger in the country, including distributional issues such as last-time accessibility, a lack of sustainable items, and transactional difficulty, among several others.

According to a BCG Research titled “The Changing Face of Indian Insurance”, insurance programs such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) have raised crop insurance coverage by 6%. In addition, the Rail Insurance Scheme, which was launched in September 2016, has now insured over 9 crore passengers.

The state is aiding in the advancement of the process of giving insurance coverage to the rural part of India. Yet, there are two key components that are critical in moving this initiative forward –

Technology –

The growth of rural India’s neglected insurance industry would be challenging until new technology-driven accessible strategies and products are developed. These must be carefully selected with the intended population’s demands and financial levels in consideration. Some examples of such models and goods include —

Digital banks based on the Aadhaar framework and using Aadhaar Enabled Payment Systems (AePs) for payments make digital financial services available to the rural folks. Insurers may consolidate health, life, and livestock insurance plans and make them accessible remotely for quick access.

New-Age Insurance platforms and renowned insurers have started providing Rural Insurance Policies that may be purchased online. Consumers do not need to visit a physical location to evaluate and buy insurance. They may now do it from any smartphone or pc with active internet access.

In this regard, insurance mobile services are a significant breakthrough. Every other person in India owns a smartphone, and rural India is no exception. Insurance mobile services provide the expertise that allows insurance products to be accessed via mobile phones.

Easily Manageable Insurance Product Lines –

Bite-sized insurance products & plans are some more major aspects of facilitating the insurance market’s entrance into rural India. Because of their cheaper premium prices, simple paperwork, and ease of availability via cellphones, these insurance are available to a larger audience. They are particularly prevalent among first-time insurance holders, millennials, and those seeking to insure a certain issue. Dengue insurance, Travel insurance, and Cab Trip insurance are a few examples of such products.

Numerous insurers offer custom-fit insurance policies for moderate-income groups based on their specific needs. Some insurers have IRDAI licenses to market their products, while others have collaborations with conventional insurance firms to co-create these product lines and make them available to the public.

One such example is the collaboration of top Insurance firms such as Max Bupa and Edelweiss Tokio with Mobikwik. They work together to provide coverage for vector-borne illnesses and term insurance policies. By the end of 2019, Max Bupa had sold about 100 HospiCash insurance every day. In the same year, Mobikwik sold over 5 lakh plans and collected Rs 4 crores in premiums. The sales estimate demonstrates the rapid popularity of bite-sized items capable of reaching rural India.
You can now rely on our expert advisors to make your insurance experience as comfortable and smooth as possible. Speak to an advisor today at the Ditto Helpline.