MR Microinsurance_2012_03_29.indd - International Labour ...

458 Insurers and microinsurance
Bancassurance and banking correspondents: SBI Life, the largest private
life insurer in the country, distributes the majority of its portfolio through the
bank branches of its parent company to reach self-help groups. The new variation
of bancassurance is with banking correspondent companies, such as Financial
Information and Operations Network (FINO), A Little World and Eko
Indian Financial Services, which are catering to the huge unmet demand for convenient
banking services and offering an avenue for insurance distribution. This
channel is unique because it relies on voluntary sales by a local agent, so products
must be simple and pre-underwritten, with easy claims adjudication. Bharti Axa
has collaborated with Eko to provide Bachat Bima (savings insurance), while
HDFC Ergo’s alliance with FINO sold 100 000 personal accident policies. These
products are part of the trend to achieve high business volumes by distributing
simple, low-value, affordable products.
Direct sales: Historically LIC, and more recently Tata AIG, have used individual
agents to deliver life insurance in rural areas. A more recent innovation
with potential to scale has been MNYL’s technology-enabled agents distributing
the Max Vijay product and servicing it through point-of-sale (PoS) machines.
This model has experienced mixed success. Although the insurer managed to sell
more than 90 000 policies, it had less success encouraging top-ups, or the
on-going payments, possibly because the completely flexible approach with no
payment schedule was too flexible, and did not instil sufficient discipline (see
Chapter 8).
In general, the potential success of many of these new delivery channels
hinges on technological solutions, as illustrated in Box 20.8, which facilitate
greater outreach and efficiency of microinsurance (see Chapter 24).
20.4 Conclusion: Catalysts of success
By most accounts, the development of microinsurance in India is a success
story. While there is certainly room for improvement, anyone interested in
expanding social protection and/or developing inclusive insurance markets
could learn valuable lessons from the Indian experience. Perhaps one of the
more interesting observations is how closely integrated the state and the market
can become.
Based on the evidence from India, the following are critical to a sustainable
and scalable microinsurance market: 1) government commitment; 2) conducive
regulation; 3) technological solutions; 4) new stakeholders; and 5) specialized
products.