Kamlesh Prajapati Grand Project Report of Mba

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE
GRAND PROJECT REPORT SUBMITTED TOWARDS THE FULFILLMENT OF POST GRADUATE DEGREE
COMPREHENSIVE PROJECT REPORT ON MICROINSURANCE
Submitted To:
INDU MANAGEMENT INSTITUTE, VADODARA Faculty Guide: Ms. Harshita Samrani Mr. Divyesh Patel
Submitted To:
GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD
Submitted By:
1) Kamlesh T Gadher Roll No: 11 MBA (Finance) Batch 2009-11 2) Ankur J Patel Roll No: 30 MBA (Finance)
Indu Management Institute
COMPRE E
E PROJECT REPORT ON MICRO INSURANCE
DECLERATION
This project report entitled as Comprehensi e Project Report on Micro-Insurance submitted to the Indu Management Institute, Ankodi a in the fulfillment of requirement for Master of Business Administrator (MBA) degree has been completed by us under the guidance of Ms. Harshita Samrani and Mr. Divyesh Patel. We hereby, Kamlesh Gadher & Ankur Patel, giving assurance that the Grand project is done with our sincere efforts & our own observations. We have completed the project on our own efforts & not try to make any duplication. Kamlesh T Gadher M.B.A (IVth Sem.) Roll No: 11 IMI, Ankodiya Ankur J Patel M.B.A (IVth Sem.) Roll No: 30 IMI, Ankodiya
Place: Vadodara Date: 30/05/2011
COMPRE ENSIVE PROJECT REPORT ON MICRO INSURANCE
ACKNOWLEGEMENT
It is very prestigious for us to undertake our Grand Project in a topic of Micro Insurance. Survey holds very important position in the overall process of education because one can feel the real word of business through Primary Data. We are great thankful to Ms. Harshita Samrani for giving permission to conduct our project. We would also like to say thanks for guiding us for preparing questionnaire for our project. And also like to say thank to all other people for their support and help required during the project. We would like to thank specially to Mr. Di esh Patel who can give me support and also
give me important suggestions whenever I got confused. We would also glad to highlight the contribution of people who gave the information towards the Micro-Insurance. Finally we like to thank other faculty members of institute for their invaluable assistance in major part of our project work. They had been informative, supportive and completely devoted during the entire Grand period of our study. Kamlesh Gadher & Ankur J Patel Indu Management Institute.
EXECUTIVE SUMMARY
True learning is born out of experience and observations. Practical experience is one of the best types of learning as this report is practical efforts which flashes throw on comprehensive report on Micro Insurance. The aim of this report is to provide an overview of existing knowledge on the demand and supply of micro-insurance in India, as a basis for reducing the vulnerability of low income people while developing new market opportunities. In the first section, the report explores how micro-insurance began in India, and gives reasons for its dynamism. The sections include an investigation into the supply and demand of micro-insurance in India, a look at the various channels for distribution, an examination of social security in India and its relationship to micro-insurance, and a short section on possible partnerships for donors wishing to work on micro-insurance in India.
TABLE OF CONTENT
NO TITLE PG NO.
1 2 3
Introduction Literature Review Objective Of Study
6 46 50
4 5 6 7 8 9 10
Research Methodology Analysis & Interpretation Findings Recommendation & Suggestion Conclusion Bibliography Questionnaires
51 53 69 70 73 74 75
Ch. 1. Introduction
India is enjoying rapid growth and benefits from a young population. Its middle class is growing rapidly but 70 percent of the population is still rural, often very poor, and handicapped by poor health and health services, and low literacy rates. Although the type of risks faced by the poor such as that of death, illness, injury and accident, are no different from those faced by others, they are more vulnerable to such risks because of their economic circumstance. According to World Bank study (Peters et al. 2002), reports that about one fourth of hospitalized Indians fall below the poverty line as a result of their stay in hospitals. The same study reports that more than 40 percent of hospitalized patients take loans or sell assets to pay for hospitalization. When a poors familys income generator dies, when a child of a poor family is hospitalized, or home of a poor family is destroys by flood, earthquake or fire. Every illness every accident or every natural disaster leads to deeper poverty to a poor family. Thats where micro insurance comes in. Micro-insurance is the protection of low income households against specific perils in exchange for premium payments proportionate to the likelihood and cost of the risk involved. It is specifically designed for the protection of low income people with affordableinsurance products to help them cope with and recover from common risk. A key strategy for enhancing economic development and alleviating poverty is to make financial systems more inclusive, for example by improving access to savings and credit services for up and under-served markets. In part, Poverty stems from the fact that low-income households and markets do not have the same opportunities to finance investments accumulate capital or protect assets (including human assets). The poors heavy reliance on informal financial services such as moneylenders, under-themattress savings and mutual assistance societies can be inefficient and expensive, and may
even exacerbate poverty. An inclusive financial system makes insurance available to low income persons. However, many commercial insurers and policymakers believe that providing insurance to the poor is the responsibility of the state. Although many governments have social protection programmes, the targeting of these schemes is often ineffective. The poorest segments do not always benefit from the subsidy, while people who can afford insurance often find ways to access these benefits. In general, governments have made little effort to shift the burden of risk-pooling to market-led schemes; and the private sector (commercial insurers) seems to have little incentive to seek out this market segment. In principle, micro-insurance works like any typical insurance business. But there are several things that differentiate it from normal insurance. First, it is group insurance that can cover thousands of customers under one contract. Second, micro-insurance requires an intermediary between the customer and the insurance company. Preferably, this intermediary is a non governmental organi ation (NGO) or microfinance institution, for example a rural bank that can handle the whole distribution and most of the administration process. The few differences between traditional insurance and micro-insurance are as follows:
Traditional Insurance Clients

y y
Micro-insurance
y
Low risk environment. Established insurance culture
High risk exposure/ high vulnerability,
Weak insurance culture
Distribution y Sold by licensed intermediaries ory Sold by non traditional model

by insurance companies directly to wealthy clients or companies that understand insurance intermediaries to clients with little experience of insurance
Policies
Complex policy documents with Simple language y many exclusions

y y
Few ,if any exclusion Group policies Little historical data, Group pricing Very price sensitive market Frequent or irregular payment 7
Premium calculation Premium
y y
Good statistical data
Pricing based on Individual risk y

y
Monthly/quarterly/semi or
collection
annually collection
adapted to volatile cash flow of clients

y
Often linked with other transaction (e.g. loan repayment
Control
y of Limited eligibility,
Broad eligibility
y y insurance risk Significant documentation required Limited but effective control
(adverse selection, moral hazards, frauds) Claims handling
Screening such as medical test y Insurance risk included in premium is required

y
rather than exclusion Linked to other service (like credit)
y y
Complicated process Extensive verification documentation
Simple and fast procedure of small firms.
Efficient fraud control
Historically in India, a few micro-insurance schemes were initiated, either by nongovernmental organi ations (NGO) due to the felt need in the communities in which these organi ations were involved or by the trust hospitals. These schemes have now gathered momentum partly due to the development of micro-finance activity, and partly due to the regulation that makes it mandatory for all formal insurance companies to extend their activities to rural and well-identified social sector in the country (IR A 2000). As a result, increasingly, micro-finance institutions (MFIs) and NGOs are negotiating with the for-profit insurers for the purchase of customi ed group or standardi ed individual insurance schemes for the low-income people. Although the reach of such schemes is still very limited, anywhere between 5 and 10 million individuals. The UNDP report has analyzed six key issues pertinent to the growth of the micro-insurance industry in India, capturing the concerns of different stakeholders as indicated below: I. There are specific reasons for low demand for insurance in spite of intense need. Suppliers have their own concerns which help to explain why there have been so little
efforts at market development. Consequently, the rural market is characterized by limited and inappropriate services, inadequate information and capacity gaps. II. There are challenges in product design, which has resulted in a mismatch between needs and standard products on offer. Efforts at product development / diversification have been limited. III. Pricing, including willingness to pay and the availability of subsidies, influence the market. In the absence of a historical data base on claims, premium calculations are based on remote macro aggregates and overcautious margins. Building and sharing claims histories can help in aligning pricing decisions with actuarial calculations, thereby reducing prices. IV. Difficulty in distribution is one of the most cited reasons for absence of rural insurance. The high costs of penetrating rural markets, combined with underutilization of available distribution channels, hinder the growth of rural insurance services. This adds to costs, both, managerial and financial. Like Inclusive credit, inclusive insurance is expected to be a low ticket business, requiring volumes for viability. V. VI. Cumbersome and inappropriate procedures inhibit the development of this sector. Contrasting perspectives of the insured and the insurers, lead to low customization of products and low demand for what is available.
HISTORY & VISION

The Micro Insurance Agency has its roots within Opportunity International, a large microfinance network motivated by Jesus Christ s call to serve the poor. With a network of 47 microfinance institutions, Opportunity International has been serving the entrepreneurial poor since 1971. In partnership with Opportunity s microfinance institutions, we began working in 2002 on the development of a range of life, property, livestock, crop derivative, disability, unemployment and health insurance products to cover the risks faced by Opportunity s loan clients. Micro Insurance Agency staff observed that the risks the poor face can often set them back months and years behind where their loans and savings products offered by Opportunity had taken them. For instance, a death of a family member from HIV/AIDS pre-condition most insurance companies would not cover would often mean expensive funeral costs and the loss of a breadwinner, resulting in increased economic hardship for the family. In response, Micro Insurance Agency staff developed an affordable funeral benefit product that did not exclude any pre-conditions, including HIV/AIDS. This transformed the mindset of retail insurance providers in the country, who later developed similar non-exclusive products in light of the competing environment. Through the experience of serving Opportunity s microfinance institutions and their clients, Micro Insurance Agency staff observed that the products most demanded by the poor are not always the ones available. Health insurance, for example, is a critical need of the poor but the most limited in terms of supply. In addition, policies that are available are often based on first world practices and are too complex for the simple coverage demanded. Further, when offered on an individual, one-off basis, high premium requirements and a need to pay in a single lump sum preclude a huge sector of the market from access. New distribution models and channels were needed to increase access and reduce the effective price charged to clients. In 2005, the Micro Insurance Agency was founded by Opportunity International as a fullyowned subsidiary capable of offering insurance products and services to a wide range of customers. Our mission is to empower the materially poor to transform their lives by insuring them against financial risk and its consequences. Specifically, we seek to serve the economically
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active poor who live on $4 per day or less in developing countries and provide a safety net to reduce economic setbacks.
SCOPE AND FUNCTIONS

A micro-insurance agent shall be appointed by an insurer by a deed of agreement or memorandum of understanding which should clearly specify the terms and conditions, duties and responsibilities of both the micro-insurance agent and the insurer, and he shall abide by the following:-
He shall work either for one life insurer or for one general insurer or for one life insurer
and one general insurer;
He shall be specifically authorized to perform one or more of the following functions:- Maintaining a register of all members and their dependants covered under the insurance
scheme along with details of name, age, address, nominees and thumb impression/ signature;
Collection of proposal forms; Collection of self declaration from the member that he is in good health; Collection of monies for issuance of contract or remittance of premium; distribution of policy documents; Assistance in the settlement of claims; Nomination; and Any policy administration service. The micro-insurance agent or the insurance company shall have the option to terminate
the agreement/ MOU after giving a notice of three months.
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All such agreements/ MOU must have the prior approval of the Head office of the
insurance company.
Salient features of Micro-insurance:

1) USAGE:
Though no figures are available on the exact size of the micro insurance market in India, a rough estimate would place it at around 14m individuals, or approximately 2% of the adult population. The low take-up can be ascribed to a general lack of awareness of insurance as a financial product, even in the high to middle-income market (a factor that emerged strongly from the focus group findings). In addition a lack of rural financial services infrastructure for distribution purposes, as well as a lack of actuarial data, inhibit the development of the micro insurance market.
2) PLAYERS:
Though the state-owned insurers still have the largest market share, there are now a total of 32 licensed insurers. A feature that sets India apart from other countries is the fact that micro insurance is mostly provided by large, corporate insurers. This is due to a cautious regulatory approach in response to the fact that small and cooperative financial institutions have not performed well historically that limits the players in the non-bank field to large cap institutions. The cooperative/mutual sector therefore does not feature as a provider of micro insurance, though corporate insurers use it as a distribution channel. Informal insurance is virtually exclusively the domain of formal entities such as health insurance schemes not registered for insurance purposes, rather than community risk-pooling groups, and is estimated to only comprise 20% of the market.
3) PRODUCTS:
Micro insurance in India is for the most part driven by compulsory credit life insurance on the back of microfinance. Due to the limited reach of the public health system, there is also a high natural demand for health insurance. Many MFIs therefore provide a package of compulsory insurance cover to their clients that are credit-linked this includes life, asset as well as health insurance. The cover is for the term of credit (usually 1 year). Health cover provided in such packages is not comprehensive and it covers only certain listed diseases for
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which hospitalization is required. Accident cover is a rider on life insurance and isa fixed payout. India is therefore fairly unique in that compulsory insurance cover extends beyond life cover. It is estimated that only 10% of micro insurance policies are sold on a voluntary basis. Of these, up to 90% are endowment products rather than pure risk products, indicating a preference among the low income population for financial products that provide some payout regardless of whether a risk event has occurred.
4) DISTRIBUTION:
Distribution is an important part of the micro insurance landscape in India. Regulations were issued in 2005 to create a micro insurance agent category for the dedicated distribution of micro insurance. Currently such agents however only distribute about 20% of all micro insurance. Instead, distribution mainly takes place through MFIs who either do not qualify as micro insurance agents under the regulations or who find the regulations too restrictive, as partners or agents of formal insurers. We can distinguish four institutional models for providing micro insurance which help us to understand how corporate insurers, government bodies as well as other institutions, such as microfinance institutions (MFIs) can play a role .
Development of Micro-insurance in India

Historically in India, a few micro-insurance schemes were initiated, either by nongovernmental organizations (NGO) due to the felt need in the communities in which these organizations were involved or by the trust hospitals. These schemes have now gathered momentum partly due to the development of micro- Finance activity, and partly due to the regulation that makes it mandatory for all formal insurance companies to Extend their activities to rural and well identified social sector in the country (IRDA 2000). As a result, increasingly, micro-finance institutions. (MFIs) and NGOs are negotiating with the for-profit insurers for the purchase of customized group or standardized individual insurance schemes for the low -income people. Although the reach of such schemes is still very limited anywhere between 5 and 10 million individuals--their potential is viewed to be considerable. The overall market is estimated to reach Rs. 250 billion by 2008.
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The insurance regulatory and development authority (IRDA) defines rural sector as consisting of (i) a population of less than five thousand, a density of population of less than four hundred per square kilometre, and (ii) More than twenty five per cent of the male working population is engaged in agricultural pursuits. The categories of workers falling under agricultural pursuits are: cultivators, agricultural labourers, and workers in livestock, forestry, fishing, hunting and plantations, orchards and allied activities. The social sector as defined by the insurance regulator consists of 1) Unorganized sector 2) Informal sector 3) Economically vulnerable or backward classes, and 4) Other categories of persons, both in rural and urban areas. The social obligations are in terms of number of individuals to be covered by both life and non-life insurers in certain identified sections of the society.1The rural obligations are in terms of certain minimum percentage of total polices written by life insurance companies and, for general insurance companies, these obligations are in terms of percentage of total gross premium collected. Some aspects of these obligations are particularly noteworthy. First, the social and rural obligations do not necessarily require (cross) subsidizing insurance. Second, these obligations are to be fulfilled right from the first year of commencement of operations by the new insurers. Third, there is no exit option available to insurers who are not keen on servicing the rural and low-income segment. Finally, non-fulfilment of these obligations can invite penalties from the regulator. In order to fulfil these requirements all insurance companies have designed products for the poorer sections and low-income individuals. Both public and private insurance companies are adopting similar strategies of developing collaborations with the various civil Society associations. The presence of these associations as a mediating agency, or what we call a nodal agency, that represents, and acts on behalf of the target community is essential in extending insurance cover to the poor. The nodal agency helps the formal insurance providers overcome both informational disadvantage and high transaction costs in providing insurance to the low-income people. In the absence of a nodal agency, the low resource base of the
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poor, coupled with high transaction costs (relative to the magnitude of transactions) gives rise to the affordability issue. Lack of affordability prevents their latent demand from expressing itself in the market. Hence the nodal agencies that organise the poor, impart training, and work for the welfare of the low-income people play an important role both in generating both the demand for insurance as well as the supply of cost-effective insurance.
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Micro Insurance Delivery Models

One of the greatest challenges for micro-insurance is the actual delivery to clients. Methods and models for doing so vary depending on the organization, institution, and provider involved. In general, there are four main methods for offering micro -insurance the partneragent model, the full-service model, the provider-driven model and the community -based model. Each of these models has their own advantages and disadvantages .
1. Partner agent model:

A partnership is formed between the micro-insurance scheme and an agent (insurance company, microfinance institution, donor, etc.), and in some cases a third -party healthcare provider. The micro-insurance scheme is responsible for the delivery and marketing of products to the clients, while the agent retains all responsibility for design and development. In this model, micro-insurance schemes benefit from limited risk, but are also disadvantaged in their limited control. The insurer absorbs the risk, and the MFI/NGO markets the product through its established distribution network. This lowers the cost of distribution and thus promotes affordability. This model of collaboration has become the dominant approach to micro insurance in India and has encouraged many microfinance institutions to switch from a full service model to the partner-agent model. Examples of this scheme are AIDMI's Afat Vi
well as SEWA, a micro insurance pioneer, who offers its life, health and asset coverage in partnership with various insurers.
2. Full service model:

The micro-insurance scheme is in charge of everything; both the design and delivery of products to the clients, working with external healthcare providers to provide the services. This model has the advantage of offering micro -insurance schemes full control, yet the disadvantage of higher risks.
as
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A MFI or NGO runs its own insurance scheme for its clients and any profit or loss is absorbed by the MFI. This scheme started in urban areas and then moved to rural ones and has expanded enormously in recent years. 3. Provider-driven model : Banks and other providers of microfinance can directly offer or require insurance contracts. These are usually coupled with credit, for example, to insure against default risk. This model is used widely in the general insurance market but high transaction costs and low ability to pay premiums inhibit its extensive use in the field of disaster insurance for the poor.
4. Community-based/mutual model :
A group of people or local communities, MFIs, NGOs and/ or cooperatives develop and distribute their own product, manage the risk pool and absorb the risk. This model is advantageous for its ability to design and market products more easily and effectively, yet is disadvantaged by its small size and scope of operations. The Swayamkrushi Youth Charitable Organization (YCO) in GUJRAT is an example of a community-based model. It is primarily a savings and credit association with added insurance features. The cooperative's 8,100 members pay a yearly premium of Rs. 100 into a pool managed by the cooperative and receive cover for death and property loss. The life insurance benefit is Rs. 15,000 for a natural death and Rs. 30,000 in the event of an accidental death.
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Types of Micro Insurance
1. Life Insurance:
Life insurance pays benefits to designated beneficiaries upon the death of the insured. There are three broad types of life insurance coverage: term, whole -life, and endowment. Term life insurance policies provide a set amount of insurance coverage over aspecified period of time, such as one, five, ten, or twenty years. This insurance is appropriate when the policyholder's need for coverage is temporary. Compared with other life insurance policies this is not very complicated for the provider to offer. This is the most widely used life insurance policy in low-income communities in developing countries. Whole life insurance is a cash-value policy that provides lifetime protection. This is hardly offered in low-income markets in the developing countries Endowment life insurance pays the face value of insurance if the policyholder dies within a specified period. It thus has a longer time horizon that the term life insurance. This is also not offered widely in developing countries.
2. Health Insurance
Health insurance provides coverage against illness and accidents resulting in physical injuries. MFIs have realized that expenditures related to health problems have been a significant cause of defaults and people's inability to continue improving their economic conditions. Several MFIs have therefore, either started their own health insurance programs or have linked their clients to existing programs. While actual coverage varies, many health insurance providers cover for limited hospitalization benefits for cert in illnesses, and for a costs of physician visits and medicine. Some insurance providers also make available primary health care services such as immunization and contraceptives .
3. Property Insurance
Property insurance provides coverage against loss or da mage of assets. Providing such insurance is difficult because of the need to verify the extent of damage and determine whether loss has actually occurred. It is difficult for most MFIs to guard against such moral hazard. A few, however, do provide such cov erage. SEWA in India, for example, provides
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insurance against damage to home and productive assets. Grameen Bank in Bangladesh offers its clients insurance against the death of livestock and COLUMNA in Guatemala provides insurance against fire damage.
4. Disability Insurance
Disability insurance in most cases is tied to life insurance products. It provides protection to the policy holder and her family, should she or some of her family suffers from a disability. This is not very widely offered by Micro insurance providers. FINCA, Uganda and CARD in Philippines are examples of MFIs providing clients with disability insurance.
5. Crop Insurance
Crop insurance typically provides policy holders protection in the event their crops are destroyed by natural calamities such as floods or droughts. The experience with crop insurance in developing countries and even in the developed economies has had mixed results. To improve the ability of rural farmers to repay loans from agricultural development banks (ADBs), many governments developed crop insurance programs in the 1970s and 1980s. These programs typically provided loan repayment and occasionally income supplements to farmers suffering crop yields below an established minimum. Similar programs were developed in countries as diverse as Brazil, India, the Philippines and the USA. In each country the results were disastrous, with expenses (administrative and claims) far outstripping revenues. Reasons for the failure of crop insurance have included: bad program design (such as failure to bring into account the incentives faced by the policy holders), covariant risks typical of rain-fed agriculture systems dependent on only one or two crops, and in some cases / unanticipated catastrophic natural calamities.
5. Disaster insurance:
Disaster insurance is through a reinsurance arrangement that broadens the risk pool across countries and regions, and protects insurers against catastrophic losses.
6. Unemployment Insurance
Unemployment insurance is typically offered by the public sector. Private insurance companies are usually not involved in it. This insurance provides cash relief to individuals
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who become unemployed involuntarily and who meet certain government requirements. It also helps unemployed workers find jobs. Unemployment insurance attempts to stabilize the economy by enabling people to maintain their purchasing power.
7. Reinsurance
Reinsurance is the shifting of part or all of the insurance originally written by one insurer to another. This is a central feature of the operations of all commercial insurers. Reinsurance reduces an insurer's risk exposure and acts as an effective source of financing and a valuable source of actuarial expertise. Reinsurance can be used to stabilize profits, instead of having large fluctuations in financial outcomes year to year. It allows smaller insurers to share risk with other insurers in different regions or countries, effectively developing sufficient large risk pools by combining the risks of many insurers. Despite its obvious benefits reinsurance is largely unavailable for micro-insurers. Access to reinsurance can spur both the development of new micro-insurers and the growth of existing ones. An example of an MFI using reinsurance is that of FINCA International, Uganda which has entered a partnership with American International Group (AIG) to provide its clients life and disability insurance.
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1.
Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the message of life insurance in the country and mobilize peoples savings for nation-building activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the country. The Corporation also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, KenIndia Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C. Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit linked life insurance and pension policies in U.K. In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's income grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US). LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for Life insurance business has been 19.22 per cent per annum. The introduction of private players in the industry has added to the colors in the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in
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this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 82 %( 2004-05).
2.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups.
3. Birla Sun Life Insurance Company Ltd .

Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well known and trusted name globally amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers future.
4.
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety
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of additional coverage to ensure our customers can find an insurance product to meet their needs. Tata AIG Life is a joint venture of the Tata Group and American International Group, Inc. (AIG). They operate in 11 states with a specific relationship management team for each state. A dedicated & trained sales and marketing team manages the front end of the Micro insurance program. Our micro insurance distribution model collaborates with NGOs (Nongovernmental organizations) and Rural organizations with community level SHG (Self Help Group) women advisors who provide insurance advisory services to the rural customers at their doorstep.
5. SBI Life Insurance Company Limited

SBI Life Insurance Company Limited is a joint venture between the State Bank of India and BNP Paribas Assurance. SBI Life Insurance is registered with an authorized capital of Rs 2000 crores and a Paid-up capital of Rs 1000 Crores. SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 6 Associate Banks, SBI Group has the unrivalled strength of over 16,000 branches across the country, arguably the largest in the world. SBI Life has a unique multi-distribution model encompassing vibrant Banc assurance, Retail Agency, Institutional Alliances and Corporate Solutions distribution channels. SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBIs access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion.
6. ING Vysya Life Insurance Company Private Limited

ING Vysya Life Insurance (ING Life), a part of the ING Group the worlds largest financial services corporation entered the private life insurance industry in India in September 2001. Headquartered at Bangalore, ING Life India is staffed by over 6,000 employees and services more than 10 lakhs customers. ING Life India is a joint venture between ING Group (ING Insurance International B.V.) & Exide Industries. ING Life has a pan India network, and distributes its products through two channels, the Tied Agency Force and the Alternate Channel. The Tied Agency force comprises of over 60,000 ING Life Advisors spread across
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the country. The channel has branches in 234 cities, and 366 sales teams across the country. The Alternate Channels business within ING Life is one of the fastest growing distribution channels. The company currently has tie ups with over 200 cooperative bank across the country. The Alternate Channels division has Banc assurance (ING Vysya Bank), Referral Banks, Corporate Agents, Brokers and SMINCE.
7.
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has over 115 years of financial experience and is present in over 70 countries around the world.
8. MetLife India Insurance Company Pvt. Ltd.

MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc. and was incorporated as a joint venture between MetLife International Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors. MetLife is one of the fastest growing life insurance companies in the country. It serves its customers by offering a range of innovative products to individuals and group customers at more than 600 locations through its bank partners and company-owned offices. MetLife has more than 50,000 Financial Advisors, who help customers achieve peace of mind across the length and breadth of the country.
9. Aviva Life Insurance Company India Limited

Aviva India is a joint venture between one of the countrys oldest and largest groups, Dabur, and Aviva plc, the UK's largest insurance group, whose association with India dates back to 1834. With a strong sales force of over 30,000 Financial Planning Advisers (FPAs), we have initiated and pioneered many innovative sales approaches, including the concept of Banc
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assurance and Financial Health Check services. We are among the first companies to introduce the contemporary unit-linked products with a wide distribution network of 195 branches and close to 40 Banc assurance partnerships; we are spread across nearly 3,000 towns and cities in India.
10 .Sahara India life insurance

The Sahara Pariwars latest foray is in the field of Life Insurance. The Pariwars life insurance company Sahara India Life Insurance Company Ltd.- has been granted license by the insurance regulator the IRDA on 6th February 2004. With this approval Sahara India Life Insurance Company Ltd. becomes the first wholly and purely Indian company, without any foreign collaboration to enter the Indian Life insurance market. The launch is with an initial paid up capital of 157 crores. The Chairman of the company is Shri Subrata Roy Sahara who is also the Chairman of Sahara Pariwar.
11. Shriram life insurance company

Shriram Life Insurance Company is the joint venture between the Shriram Group and the Sanlam Group. The Shriram Group is one of the largest and well-respected financial services conglomerates in India. The Group's main line of activities in financial services include chit fund, truck financing, consumer durable financing, stock broking, insurance broking and life insurance. The Group has a customer base of 30 lacs chit subscribers and investors and operates through a network of 630 offices all over the country. The Group has the largest agency force in the private sector consisting of more than 75,000 loyal and dedicated agents.
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IDBI Fortis Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias premier development and commercial bank, Federal Bank, one of Indias leading private sector banks and Fortis Insurance International, a multinational insurance giant based out of E urope. In this venture, IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each.
25
Having started in March 2008, in just five months of inception we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners.
13. DLF Pramerica Life Insurance Co. Ltd.

DLF Pramerica Life Insurance Company Ltd. (DPLI) is a joint venture between DLF Limited and Prudential International Insurance Holdings, Ltd. (referred to hereafter as "PIIH"). PIIH is a fully owned subsidiary of Prudential Financial, Inc. (referred to hereafter as "PFI"). The combination of the strength of the DLF brand and PFI's insurance expertise provide the strongest possible foundations for DPLI to succeed in the rapidly growing Indian life insurance market.
14. Star Union Dai-ichi Life Insurance Co. Ltd.,

Bank of India and Union Bank of India, two leading Public Sector Banks in India and the Dai-ichi Mutual Life Insurance Company, leading Japanese Company in the Life Insurance market, have floated a Joint Venture Company, "Star Union Dai-ichi Life Insurance Co. Ltd." for undertaking Life Insurance Business in India. The Company has a capital stake of 51% by BOI, 26% by Dai-ichi Life and 23% by Union Bank. The Company has authorized capital of Rs. 250.00 Crores. Star Union Dai-ichi Life, with the strength of the domestic partners in the Indian Financial Sector coupled with the Dai-ichi Lifes strong domain expertise is expected, to be a strong player in the Indian Life Insurance market in a short time. The Company offers various products to serve all strata of the society.
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IRDA (MICROINSURANCE) Regulation, 2005

Regulations on micro-insurance were officially gazette by the IRDA on 30 November 2005. The salient features of the regulation are presented below.
The regulation defines micro-insurance products

The regulation provides definitions of micro -insurance products covering life and general insurance General
contract covering the belongings, such as, hut, livestock or tools or instruments or any personal accident contract, either on individual or group basis, as per terms stated in Schedule-I appended to these regulations. Life micro insurance product means any term insurance contract with or without return of premium, and endowment insurance contract or health insurance contract, with our without an accident benefit rider, either on individual or group basis, as per terms stated in Schedule-II appended to these regulations. (a) micro-insurance policy means an insurance policy sold under a plan which has been specifically approved by the Authority as a micro insurance Product. (b) micro-insurance product includes a general micro -insurance product or life insurance product, proposal form and all marketing materials in respect thereof. (c) Every insurer shall be subject to the file and use procedure with the IRDA. (d) No one other than insurer be it a micro-insurance agent or anyone else can underwrite a micro-insurance proposal. (e) Rural business transacted under micro-insurance by an insurer will be counted for quota fulfillment both for rural as well as social sector obligations.
It promotes the extensive use of intermediaries

The micro-insurance regulations promote extensive use of intermediaries by the insurers for selling and servicing various micro-insurance products. The regulation also creates a new intermediary called the micro-insurance agent. The regulation clearly defines MI agents and has imposed minima in terms of the number of years of experience (at least 3) of working with low income groups. It also emphasises the need for such agents to have appropriate aims and objectives, a good track record, transparency and ac countability stated in the bye-laws
i ro insurance product means any health insurance contract, a ny
27
with demonstrated involvement of committed people. This has been done in order to prevent the engagement of unscrupulous operators in the activity. However, the onus for the selection of appropriate MI agents and their capacity building lies with the insurance company.
Intermediary:
The micro insurance agent, can be a Non-Governmental Organization (NGO), MFI or other community organization such as Self Help Groups (SHG) appointed by an insurer to distribute micro-insurance through specified persons. Micro-insurance agents enter into a deed of agreement with the insurer. They abide by the code of conduct defined by the IRDA and attend 25 hours of training (down from 100 hours originally required for conventional insurance agents but now reduced to 50 hours) in the local language at the expense of the insurer. There is no qualifying examination, unlike the case of ordinary insurance agents. According to the regulation, (a) Non-Government Organization (NGO) means a non-profit organization registered as a society under any law, and has been working at least for th ree years with marginalized groups, with proven track record, clearly stated aims and objectives, transparency and accountability as outlined in its memorandum, rule, by-laws or regulations as the case may be, and demonstrates involvement of committed people. (b) Self Help Groups (SHG) means any informal group consisting of ten to twenty or more persons and has been working at least for three years with marginalized groups, with proven track record, clearly stated aims and objectives, transparency and accountability as outlined in its memorandum, rules, by-laws or regulations, as the case may be, and demonstrates involvement of committed people. (c) Micro-Finance Institutions (MFI) means any institution or entity or association registered under any law for the registration of societies or co-operative societies, as the case may be, inter alia, for sanctioning loan/finance to its members. IRDA has recognized four categories of intermediaries: brokers, agents, corporate agents, and Micro-insurance (MI) agents. Categories other than MI agents may sell micro-insurance but they do not benefit from the concessions allowed for the MI agents. However, a microinsurance agent shall not distribute any product other than a micro insurance product. The regulation provides for MI agents to perform the following functions (a) Collection of proposal forms
28
(b) Collection of self declaration from the proposer that he/she is in good health. (c) Collection and remittance of premium (d) Distribution of policy documents (e) Maintenance of registers of all those insured and their dependants covered under the micro insurance scheme, together with details of name, sex, age, address, nominees and thumb impression/signature of the policyholder. (f) Assistance in the settlement of claims (g) Ensuring nomination to be made by the insured (h) Any policy administration service.
The regulations attempt to manage the cost of intermediation

A cap has been put on commission, between 10 and 20% of premiums per year according to type and mode of insurance payment, which is in excess of what conventional agents would normally earn. The rates of commission applicable to MI agents are
Life insurance business

Single Premium policies 15% of the single premium. Non-single premium policies 20% of the premium for all the years of the premium paying term
General insurance business

15% of the premium
The commission rates prescribed above are more liberal than the 60% (of a single years premium) payable under ordinary business in the case of life insurance and 10% in the case of general insurance. This is based on the logic that an MI agent has to perform a number of functions which mainstream agents do not have to undertake. MI agents may thus receive commission at different rates from those applicable to other intermediaries. The commission structure is, however, changed to remove up-front payments in favors of payments upon the performance of certain functions. For group insurance products, the insurer may decide the commission subject to the overall limits specified by IRDA. MI agents may route premiums and claims payments through their books (such as receive individual premiums and pay it over as one amount). This is not allowed for other intermediaries and is considered important in managing the cost of intermediation.
29
Collaborations between life insurers and non -life insurers

The regulations allow for the bundling of life and non-life elements in one single product provided there is clear separation of premium and risk at the insurers level. Where an insurer carrying on life insurance business offers any general micro-insurance product, he shall have a tie-up with the insurer carrying on general insurance business for this purpose, and subject to the provisions of section 64 VB of the Insurance Act (governing the remittance of the premium amount to the insurance company), the premium attributable to the general microinsurance product may be collected from the prospect (proposer) by the insurer carrying on life insurance business, either directly or through any of the distributing entities of microinsurance products. In the event of any claim in regard to general micro-insurance, the insurer carrying on life business or the agent shall forward the claim to the insurer carrying on general insurance business. The same arrangement holds true for life claims faced by non-life vendors of a micro-insurance product. In both cases, the respective primary first insurer would render all assistance in claim settlement by coordinating with his opposite number.
The limitations of the micro-insurance regulations

The impact of the MI regulations is likely to be limited for a number of reasons
Definition of MI agents:
The regulations define MI agents to include NGOs SHGs and MFIs. The definition of MFI is, however, limited to societies, trusts and cooperatives societies and thus excludes a large proportion of MFIs operating through other legal forms (like for-profit and not-for profit companies). The result is that all profit-driven corporate intermediaries as well as some of the largest aggregators in micro-insurance are currently excluded from benefiting from the MI regulations. Though the formalization of MI agents as a type has been welcomed by the insurance companies as a positive beginning, the exclusion of MFIs registered under the Companies Act10 is viewed with concern
Limitation on the number of insurance companies an MFI can work with:

The MI Regulations restrict a MI agent to working with one life and/or one general insurer respectively. This is problematic and does not accommodate models currently used in the MI market. Most insurers do not want to underwrite all risks and tend to specialize in particular
30
types of risk. For example if a MI agent is tied to specialized health insurer, they cannot work with another general insurer to sell other asset insurance products.
Know Your Customer (KYC) / Anti Money Laundering (AML) Norms:

Micro insurance agents have expressed their concern at the difficulties faced by them in accessing KYC documents from proposers in rural areas, such as electoral identity card or ration card or electricity bill which are generally accepted as proves of residence.
Commission capping:
MI commissions are capped at 20% per annum for life across the term of the policy. Non-MI products typically pay commission on a front-loaded basis with 30-35% in year one with 7% in year 2. The up-front structure provides little incentive for renewals, particularly as premiums have to be collected in cash/ cheque. At the same time 20% may not be enough to incentivize sales. It is a common (but illegal under Section 48 of the Insurance Act) practice for agents to use the higher first year commission to give a discount to policyholders in the first year. Some thought would need to be given to the minimum absolute cost to sell a policy and the commission structures needed to ensure that this could be covered. Lapse rates of 3040% are much higher for MI than traditional policies. This is because the cost/effort of premium collection/renewal exceeds the commission. Besides, the incidence of the service tax of 12.36% payable by the agents is a further point of dissatisfaction for the MI agents, especially considering the long distance travel they have to make in rural areas to procure and service business.
Conflicting regulations:
Enabling provisions introduced in the MI regulations are undermined by restrictions in RBI regulations. For example, the insurance regulation allows receipt of premiums in the form of money instruments (not cash), which must be remitted within 24 hours. RBI in 2002, however, issued regulations stating that certain types of NBFCs (including most MFIs) may not route any premiums through their books. The implication is that the NBFC intermediary must make out demand drafts for individual transactions and send them to the insurer. Significant efficiencies can be gained if these intermediaries were to be allowed to process all the payments through their systems and make a single payment to insurers.
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Rural Regional Banks (RRB) and Cooperative Banks:

It is worth further examination as to whether RRB who have been given the status of corporate agents and the cooperative banks can be brought into the ambit of MI agents in view of their outreach in rural areas.
However the micro-insurance regulation has been facilitative in

Reducing the mandatory training requirements for insurance agents from 50 hours to just 25 hours in the case of MI. Most insurance companies have welcomed this move but feel that the technological innovations in developing better systems at the level of the MI agent and real awareness creation amongst potential clients/policy holders are a much larger challenge that would go a long way in developing the micro-insurance market.
Allowing MI agents to take greater responsibilities:

The regulator has allowed MI agents to take up greater responsibilities than are permitted to mainstream agents, for example, the collection of premiums on behalf of the insurance companies and the servicing of claims. IRDA believes that if the MI agents are able to carry out these functions effectively, it will help in minimizing the transaction costs that the insurance companies have to incur, thereby leading to lower premiums for the clients in the long run.
Treating
benignly
apparent
infringements
of
the
regulations
by
community-based organizations :
There are restrictive entry norms for organizations that are explicitly licensed to provide insurance to the general public. Insurance companies need a large amount of start-up capital of Rs100 crore to get a license from the IRDA. This entry norm is applicable for community based insurance as well if they want to underwrite risk. IRDA has treated the existing cases of in-house insurance with benign neglect. Essentially, this approach is dictated by the relatively limited experience and low supervisory capacity of the IRDA. Compared to the vast numbers of people in need of social protection in India, the coverage provided by both formal and, even more so, by community insurance programmes is so low that the role of regulation seems fairly limited. The creation of a two-tier space where the insurance companies are regulated and supervised and community insurance is not is de facto recognition of this fact.
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The IRDAs approach is that it is pointless to have regulations that are not properly enforced as long as community insurance agencies provide cover to a limited population that is clearly defined (either geographically or socially or through other forms of association), they can be allowed to function without being regulated. It is here that the regulations are not very clear for MFIs or NGOs, where the membership cannot be clearly defined. Although generally limited within a geographical territory, the scale of some MFIs or NGOs is significant and spans across several states.
Taxation issues
By a notification of 16 July 2001, the Government of India brought insurance auxiliary services under the ambit of Service Tax. The following important definitions and references are relevant in this context. As per section 65(31), insurance auxiliary service means any service provided by an actuary, an intermediary or insurance intermediary or an insurance agent in relation to general insurance business and includes risk assessment, claim settlement, survey and loss assessment. Taxable event and scope of service means any service provided to a policyholder or insurer by an actuary or intermediary or insurance intermediary or insurance agent, in relation to the insurance auxiliary service. The service providers are insurance agents, insurance surveyors and loss adjusters, actuaries and insurance consultants. In the case of insurance surveyors and loss adjusters, actuaries and insurance consultants, the service is provided mainly to the insurance comp anies (insurer) while in the case of insurance agents, the service is provided to both the insurer and the policy holder. Service Tax is liable to be paid by the insurance auxiliary service provider except in case of insurance agents. Insurance agents normally do not charge the policyholder. However, the insurance company pays the agent a commission (usually as a percentage of the insurance premium) on a periodic basis. In the case of an insurance agent, it has been provided in the Service Tax Rules that the person liable to pay Service Tax will be the concerned insurance company who has appointed the agent However as practiced by the companies, no service tax is paid by the agents. The service tax is payable by the person whose life is assured and the current rate is 12.36 % on the premium paid to the life insurance companies. If an agents accumulated commission for the year reaches Rs 20,000 tax is deducted (at source) by the company at the rate of 11.33% (as prescribed by the income tax rules) from the commission of the agent. The
33
service tax on premiums adds to the price of insurance. An assessment of the impact of this tax on the cost of micro-insurance is needed. From the perspective of inclusion, enabling the penetration of insurance services to low income people and in rural areas, there could be a case for exempting micro-insurance from the payment of service tax.
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MICROINSURANCE PRODUCTS IN INDIA
As from above we can see there are 23 life insurance companies are presentin India but only 14 companies are providing micro insurance products this clearly give an idea of low attraction of majority of companies towards these products. Below is the list of micro insurance products along with the name of companies:
Name of Insurer AVIVA Life Ins. Co. India Pvt. Ltd. Bajaj Allianz Life Insurance Co. Ltd
Name of the Product Grameen Suraksha. Bajaj Allianz Jana Vikas Yojana. Bajaj Allianz Saral Suraksha Yojana. Bajaj Allianz Alp Nivesh Yojana.
Birla Sun Life Insurance Co. Ltd.
Birla Sun Life Insurance Bima Suraksha Super. Birla Sun Life Insurance Bima Sanchay. Dhan
DLF Pramerica Life Insurance Co. DLF Pramerica Sarv-Suraksha. Ltd ICICI Prudential Life Insurance Co. ICICI Prud. Sarv Jana Suraksha Ltd IDBI Fortis Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Ltd. Life Insurance Corporation of India IDBI Fortis Group Micro insurance Plan ING Vysya Saral Suraksha LIC's Jeevan Madhur.
35
LIC's Jeevan Mangal. Met Life India Sahara India Life Insurance Co. Ltd. Met Vishwas Sahara Sahayog (Micro Endowment
Insurance without profit plan). SBI Life Insurance Co. Ltd. SBI Life Grameen Shakti. SBI Life Grameen Super Suraksha. Shriram Life Insurance Co. Ltd. Shri Sahay. Sri Sahay (AP). Star Union Dai-ichi Life Insurance SUD Life Paraspar Suraksha Plan. Co TATA AIG Life Insurance Co. Ltd. Ayushman Yojana. Navkalyan Yojana. Sampoorn Bima Yojana. Tata AIG Sumangal Bima Yojana.
(1). AVIVA Life Ins. Co. India Pvt. Ltd. Grameen Suraksha
A micro-insurance rural term insurance plan for BASIX customers. This traditional term plan has been developed with the objective of giving the rural policyholder maximum benefits.
y
the policyholder pays premium for a period of just two years and then avails the term benefit for 5 or 10 years The minimum sum assured is Rs 5,000 and the maximum is Rs 50,000. In addition, tax benefits can be availed as per Section 80C of the Income Tax Act, 1961.
y y
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(2).Bajaj Allianz Life Insurance Co. Ltd Jana Vikas Yojana

A single premium plan with maturity benefit of 125% of the single premium payable on survival till the end of the policy term.
y y
Life Cover. Maturity Benefit of 125%of the single premium payable on survival till the end of the policy term.
Guaranteed Surrender Value.
Saral Suraksha Yojana

The Most economical term insurance policy with return of premium on maturity.
y y y
Return of premium on maturity Guaranteed Surrender Value Avail additional benefits including Accidental Death Benefit & Accidental Permanent Total / Partial Disability Benefit
Alp Nivesh Yojana

An endowment plan with Life cover and Maturity benefit equal to sum assured + vested bonus.
y y y
Life cover and Maturity benefit equal to sum assured + vested bonus Guaranteed Surrender Value. Avail additional benefits including Accidental Death Benefit & Accidental Permanent Total / Partial Disability Benefit.
37
(3). Bi l Sun Li
Insurance C . Lt .
BSLI Bima Suraksha Super

BSLI Bima Suraksha Super provides you life insurance cover for which you have to pay regular premium. The nominee gets the sum assured in the unfortunate event of death.
y
BSLI Bima Suraksha Super provides you life insurance cover for which you have to pay regular premium. The nominee gets the sum assured in the unfortunate event of death.
y y y
Your premium depends on your age, gender, Sum Assured and benefit period chosen. At maturity, there is no benefit payable. An option for additional Sum Assured is available provided the base sum assured is greater than or equal to 10,000/- if the death occurs due to accident.
. BSLI Bima Dhan Sanchay

y A Win-Win Situation Security plus Guarantee. The refund of premiums paid by you is guaranteed with 3 maturity options. y y y y Sum Assured Rs.5,000/- to Rs.50,000/Maximum Maturity age 65 years A grace period of 180 days from the premium due date will be available to you An option for additional Sum Assured is available provided the base sum assured is minimum Rs 10,000/- and the sum assured under the rider should not exceed the sum assured under the base product if the death occurs due to accident .
(4). ICICI Prudential Li e Insurance C . Ltd
ICICI Prud. Sarv Jana Suraksha

ICICI Prudential Life Insurance presents its first Micro Insurance Plan - Sarv Jana Suraksha especially designed for rural population which provides total security to you and your family, at very affordable cost.
y y y
Min / Max entry age-18 years - 55 years Min/Max Sum Assured- Rs. 5,000 -Rs. 50,000 Policy Term -5 years 38

y
Cover ceasing age -60 years
(5). IDBI Fortis Life Insurance Co. Ltd. IDBI Fortis Group Microsurance Plan
The first of its kind group that will be benefited by this unique plan is Samhita Community Development Services, announced officially by IDBI Fortis Life Insurance Co Ltd at a press conference held at Bhopal today. This tie-up will insure 13,356 poor members for a Sum Assured of over Rs. 7cr in the rural and urban areas of Madhya Pradesh. The plan provides affordable life insurance cover to groups offering great value to Micro Finance Institutions, Self-Help Groups and NGOs. Not only does the plan insure the lives of their group members and thus provide security to the group members families, it can also be used for providing protection from loan liabilities in the unfortunate event of the death of the main bread-winner.
(6). Life Insurance Corporation of India

LIC's Jeevan Madhur Jeevan Madhur, is available to both male & female without any medical examination and is
a simple saving related life insurance plan covering individuals in the age group of 18 to 60 years. Minimum sum assured under the plan is Rs. 5000 and maximum sum assured is Rs. 30000. Mode of payment of premium can be even weekly/fortnightly in addition to other regular modes to suit the needs of people with low income. Minimum premium is Rs. 25/- per week, Rs. 50/- per fortnight, Rs. 100/- per month which is expected to be well within reach of the targeted group. The term of policy ranges between 5 to 15 years. The policy, if kept in full force, is entitled to the simple reversionary bonuses depending upon Corporations experience. Accident benefit is also applicable as per terms and conditions of the policy. After premiums are paid for 2 years, Auto Cover facility i.e., continuance of cover even in case of inability to pay premium up to 2 years from the date of First Unpaid premium is available to take care of contingencies and uncertainties of income.
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LIC's Jeevan Mangal

A term assurance plan with return of premiums paid on maturity. The Micro Insurance Plan Jeevan Mangal launched today is a term assurance plan with return of premium on maturity providing for a sum assured (risk cover) ranging from minimum of Rs.10, 000/- to maximum of Rs.50, 000/- with an optional accident benefit rider, together providing for total death benefit equal to double the sum assured, on death due to accident.
(7). Met Life India
Met Vishwas
It is a life insurance plan that protects you in case of death at a nominal cost when you survive the term of the policy you get back up to 125% of premium (in case of coverage term 10 years) Maturity benefit: 110% of the single premium paid for a 5 year coverage term 125% of the single premium paid for a 5 year coverage term Entry Age: 18 to 60years Policy Term: 5 or 10 years Premium Paying Term: 2 years (payable in yearly mode only) Sum Assured: Rs. 5,000 to Rs.50,000 (in multiples of Rs. 5,000 only) A grace period of one month is allowed for payment of premium.
(8). SBI Life Insurance Co. Ltd. SBI Life insuances Grameen Super Suraksha and Grameen Shakti
SBI Life insurances Grameen Super Suraksha and Grameen Shakti products have been designed to meet the requirements of the weaker sections of the rural population. Grameen Super Suraksha is a micro insurance pure term product and Grameen Shaktiis micro insurance product with ROP. Grameen Shakti is a dual benefit life insurance product to safe guard the group member which provides Protection with maturity benefit at affordable rates. It offers to the Family of the group member Protection & it offers to the Group member survival Benefit. Duration of plan: 5 years or 10 years as per the Group Master Policyholders choice.
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Age at entry: Minimum 18 years age last birthday. Maximum 50 years age last birthday. Sum assured: Rs.5, 000/- to Rs.50, 000/- (in multiples of 5,000) as per choice of Master Policyholder. Premium frequency: Yearly. Requirement from the Group member: Automatic acceptance linked to signature of Membership form that includes Good health declaration and nomination clause. Death Benefits: First 45 days after the cover start date or after the revival date No death claim will be accepted (inclusive of accidental death) Form 46th day from cover start date / revival date Sum assured is payable
(9). Star Union Dai-ichi Life Insurance Co .Ltd

SUD Life Paraspar Suraksha Plan The scheme has been specifically designed for the weaker sections of the society and those from the rural areas. The scheme covers the groups of 200 and or members. The scheme is to provide life cover at low cost to groups of persons engaged in a common economic activity like those financed by an NGO, MFI or Banks in rural or urban areas. Entry Age: 18 to 50years Group size: minimum-100, maximum no limit Premium Paying Term: Minimum premium- single premium-162.50, annual premium-33.50 Maximum premium- single premium-1625.0, annual premium-335.0 Sum Assured: Rs. 5,000 to Rs.50,000 (in multiples of Rs. 5,000 only)
(10). TATA AIG Life Insurance Co. Ltd. Ayushman Yojana

A non participating single premium plan, Tata AIG Life Ayushman Yojana is ideal for rural populations who have seasonal income. With payment of a single premium at the beginning of policy term, a person will be insured for 10 years. Besides being insured, the policyholder, upon maturity of the policy receives 125% of the single premium paid.
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y y y y
Convenience of single premium payment Policy Term of 10 years Death Benefit paid to the nominee in case of unfortunate death of life insured Option to choose Life Cover from a minimum of Rs.5,000 to a maximum of Rs.50,000
On maturity, get 125% of the single premium paid
Navkalyan Yojana
A regular premium payment, low cost term plan for the rural adults who seek life insurance protection without any maturity benefit.
y y
Policy Term : 5 years Coverage Limits : Minimum Death Benefit (Sum Assured): Rs.5,000/Maximum Death Benefit (Sum Assured): Rs.50,000
y y y y
Premium payment frequency : Monthly, quarterly, half yearly & yearly Death Benefit : Sum assured to the policyholders nominee Maturity benefit : None Rider: Option to attach Accident Death Benefit Rider for issue ages 18 to 55 years at a nominal extra charge.
Sampoorn Bima Yojana

A low cost insurance plan where the policyholder receives all the premiums paid during the policy term upon survival until the term of the policy. Premiums are payable for only 10 years, while the coverage is up to 15 years. y y Policy Term: 15 years Coverage Limits : Minimum Death Benefit (Sum Assured): Rs.5,000/-
Maximum Death Benefit (Sum Assured): Rs.50,000/ y y y Premium payment frequency : Monthly, quarterly, half yearly & yearly Death Benefit : Sum assured is paid to the policyholders nominee Maturity benefit: At the end of the 15 years, all the premiums paid will be returned to the policyholder.
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Sumangal Bima Yojana

In this plan you have to pay premium for 10 years and you get insurance protection for 15 years. Enjoy total guaranteed returns of 120% of the *total policy premium at specified intervals during term of the policy.
y y y
Policy Term : 15 years Premium Paying term : 10 years Coverage Limits : Minimum Death Benefit (Sum Assured): Rs.5,000/Maximum Death Benefit (Sum Assured): Rs.30,000/-
y y
Premium payment frequency : Monthly, quarterly, half yearly & yearly Survival Benefit: We shall pay you the survival benefits as below, if you have paid all due premiums.
The Potential Market for Micro-Insurance in India Insurance Segment Market Size (Potential)(Rs. Millions)
Life Segment Non-Life Segment TOTAL (Life and Non-Life) 15393-20141 46911.70-64,126.55 62304.70-84,267.55
SOURCE: UNDP (2007). Building Capacity for the Poor Potential and Prospect for MicroInsurance in India. UNDP Regional Centre, Colombo.
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GENERAL MICRO-INSURANCE PRODUCT

A general micro-insurance product means any health insurance contract, any contract covering the belongings such as hut, livestock, any personal accident contract, or tools or instruments, either on individual or group basis, as per terms stated in the Table below, filed with the Authority:
Type of Cover
Minimum Amount of Cover
Maximum Amount of Cover
Term of Cover Min.
Term of Cover Max.
Minimu m Age at entry
Maximum age at entry
Dwelling
&
content, or livestock or Tools or Rs. 5,000 Per Rs. Per asset/cover 30,000 1 year 1 year NA NA
implements or other asset/cover named Crop assets/or insurance
against all perils Health Insurance Rs. 5,000 Rs. 30,000 1 year 1 year Insurers discretion
Contract (Ind.) Health Insurance
Contract (family) (Option limit to avail for Rs. 10,000 Rs. 30,000 1 year 1 year Insurers discretion
Individual/Float on family) Personal (per Accident life/earning Rs. 10,000 Rs. 50,000 1 year 1 year 5 70
member of family)
SOURCE: IRDA Micro-Insurance Regulations, 2005, www.irdaindia.com NOTE: The minimum number of member comprising a group shall be at least twenty for group insurance.
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LIFE MICRO-INSURANCE PRODUCT

A life micro-insurance product means any term insurance contract with or without return of premium, any endowment insurance contract or health insurance contract, with or without an accident benefit rider, either on individual or group basis, as per terms stated in the Table A below, filed with the Authority: Type of Cover Minimum Maximum Term Term of Cover Max. Minimum Age entry Maximum
Amount of Amount of of Cover Cover Cover Min. Term Insurance with or without return premium Endowment Insurance Health Insurance Contract (Individual) Health Insurance Contract (Family) Accident Benefit as rider Rs. 10,000 Rs. 50,000 5 year Rs. 10,000 Rs. 30,000 1 year Rs. 5,000 Rs. 30,000 1 year Rs. 5,000 Rs. 30,000 5 year of Rs. 5,000 Rs. 50,000 5 year
at age at entry
15 years 15 years
18
60
18
60
7 year
Insurers discretion
7 year
Insurers discretion
15 years
18
60
SOURCE: IRDA Micro-Insurance Regulations, 2005, www.irdaindia.com NOTE: 1. Group insurance products may be renewable on a yearly basis. 2. The minimum number of members comprising a group shall be at least twenty for group insurance.
45
Ch.2 LITERATURE REVIEW

It is estimated that India has 300 million BPL population or 60 million BPL families, without any kind of social protection. The spread of health insurance is only negligible in this segment and that too because of the NGOs operating in this arena. Althoug the reach of such h schemes is still very limited---anywhere between 5 and 10 million individuals---their potential is viewed to be considerable. The overall market is estimated to reach Rs. 250 billion by 2008 (ILO 2004). But unless the people from this segment develop confidence over the infrastructure facilities and the assurity of the supply chain management of insurance services, this will not be practically possible. Martina Wiedmaier-Pfister (2004) revealed that a number of clarifications are import nt for a the insurers. The first point relates to the delineation of social protection schemes (government driven and provided to the poorest), and privately, market -led insurance services (provided by a private insurer or informally organized and bought by those who can afford them). The second point relates to the role of reinsurance, which is definitively a crucial area for micro-insurance. Third, the history and experiences of the regulation and supervision of micro-insurance in industrialized countries could also not be considered. Ramesh Bhat and Nishant Jain (2006) examines the factor affecting insurance purchase decision his study at Anand district in Gujarat in his study he found that amount of income and healthcare expenditure are major d eterminant of health insurance plans and income of person have significant effect on amount of health insurance purchase but there is nonlinear relationship between them in addition number of children in family, age, and perception regarding future health care expenditure were also found to be significant. Dr. S. Ganesan and Dr. S. Jayaprakash in Eleventh Annual APRIA Conference (2007) about Micro Banc assurance Models for India suggest that the growth of micro insurance in India does not lies only in the hands of the product design, distribution network but also in creating the proper infrastructure that can support the servicing of insurance policies. India is a very big country with villages as its backbones. Enormous involvement of various stakeholder is s required to create proper infrastructure for the growth of insurance/micro insurance in the rural areas. He stresses the need for viewing the banks not as a mere distribution channel for
46
insurance but to convert the same into a strategic business unit wherein the banks will be the epicenter of operations for the growth of the infrastructure in the rural. Jim Roth, Michael J. McCord and Dominic Libber (2007) presented a report which gives a description about the functioning of Micro insurance and detailed quantities overview of micro insurance in worlds 100 poorest countries in which he explains about distribution channels, types of micro insurers and various micro insurance products , regulation and social security schemes in 100 countries including India. Seiro Ito and Hisaki Kono (2007) investigate take-up decisions using household data collected in Karnataka, India, especially focusing on prospect theory, hyperbolic preference, and adverse selection. There they found some evidence that people behave in a risk-loving way when facing the risk of losses, which is consistent with prospect theory. Since insurance covers losses, we suspect that these people are less likely to take up insurance and they found some evidence supporting this view. They also find that hyperbolic discounters are more likely to purchase insurance, a fact which can be explained by the demand for commitment among sophisticated hyperbolic discounters have. Also find some evidence on the existence for adverse selection: households with a higher ratio of sick members are more likely to purchase insurance. Interestingly, they also find that households with a sick household head are less likely to purchase the insurance. This may capture the fact that households with a sick household head have less income flow and have difficulty in financing the insurance premium. Koli N Rao (July 2008) said that in India, agricultural risks are exacerbated by a variety of factors, ranging from weather variability, frequent natural disasters, uncertainties in yields and prices, weak rural infrastructure, imperfect markets and inadequate and sub-optimal financial services including the limited span and design of risk mitigation instruments such as credit and insurance and farmers use a variety of formal and informal techniques to manage and mitigate risk, ranging from the use of drought resistant crop varieties to reduced consumption and sale of assets. The Government is also implementing a large number of schemes to provide succor to farmers facing adversity, the Comprehensive Agriculture risk management framework can be presented in three main categories: The first covers direct initiatives on the part of the Government, such as agricultural credit, input subsidies and calamity relief. The second covers indirect initiatives on the part of the
47
Government to mitigate production risks through insurance mechanisms covering crops, weather and livestock and including micro insurance. Thirdly, Government and market-based approaches to mitigate price or income risks, which include minimum support prices, farm income insurance, a price stabilization fund, commodity markets, contract farming, etc. he also told about different stages of development of micro insurance in India: There are three distinct phases of micro-insurance (MI) development in India. The first phase coincided with the introduction of target- oriented poverty alleviation programs such as the Integrated Rural Development Program (IRDP). The second phase of MI growth can be seen in conjunction with the growth of credit disbursement to the poorer segments of society through the Self Help Groups (SHGs). This saw an increase in the role of Non-Governmental Organizations (NGOs) for the purposes of intermediation and the proliferation of Microfinance Institutions (MFIs). The third phase of MI development was borne out of the increasing realization of the need for an increased coverage of poorer households through some form of social security measure. Mark malika and Anet T. Kuriakose (2008) discussed the role of micro insurance in mitigating external shocks on poor household. He also stressed on careful attention and expert technical input is required in designing micro insurance products and programs as they are significantly more complex than and credit programs offered by different organizations. Use of different risk layering using different form of reinsurance to cover the insurer is crucial from a financial sustainability standpoint, and the use of various outreach mechanism to reach poor household is necessary from an equity point of view. Michael J McCord (March 2008) suggested many inputs required to reach micro insurance to billions of poor peoples some of these inputs are - Coordination of knowledge of activities to allow all parties- mutuals, commercial insurers, intermediaries and delivery channels, governments, donors, and othersto maximize effectiveness, Improving products and processes that recognize the needs of low-income families and satisfy their needs with value, Innovation in processes that can be replaced or augmented by technology. This requires financial and regulatory facilitation, and an openness to offer such technology on a public platform, Careful development of regulation that effectively balances the need for consumer protection with the flexibility needed to develop and service a massive market. Rachele Pierre(2008) gives an overview of Christian Aid interest in crop/ weather microinsurance (MI) as well as partners involvement in micro-insurance related products and 48
services in his research he found that majority of people interviewed (85%) believe crop/weather insurance would help poor farmers in managing weather risks and this percentage rises to 100 % for interviewees based in field. For most respondents conditions for successful MI would be the presence of empowered communities and the absence of conflict, while protection to different categories of poor (not only farmers but also landless and marginalized pastoralist communities) makes weather insurance more appealing than traditional crop insurance. Wendy J. Werner (August 2009) analyses micro-insurance schemes in Bangladesh with contrasting examples from India and found that these schemes improves the health status of poor and also it reduces poverty, these micro insurance schemes had reduced the barriers of health services for poor and encouraged them to avail of clinics and trained medical care i.e. the micro-insurance schemes for health in Bangladeshi have increased access to basic healthcare , However, there is both demand and necessity for surgeries and more expensive medical procedures among the poor that remains unaddressed by basic micro insurance for health. Micro-insurance can serve the interests of poor populations with risk-pooling to manage unpredictable employment, flows of income, and catastrophic events. To ensure that micro-insurance safeguards the assets and interests of the poor, micro- insurance initiatives must exercise professional management, product development, management information systems, and re-insurance.
49
Ch.3 OBJECTIVES OF STUDY
OBJECTIVES
To understand what Micro-Insurance is? To find the awareness of micro insurance among Rural group of people in Gujarat. To recognize the Potential Market for Micro-Insurance in Gujarat. To identify the Key Characteristics of Micro Insurance. To find the preference of various products in Micro insurance of clients.
To explain the various difficulties of insurers to produce, mar et and distribute different k
micro insurance products.
SCOPE OF THE STUDY Meaning and concept of Micro-Insurance. Need for developing micro-insurance in Gujarat. Conducted unstructured interviews sample size of 100 general people having income less
than Rs. 350 per day.
The area which was selected for the survey is bounded by central sub urban of Gujarat State. LIMITATIONS Data collection was very time consuming. Since it is a new concept, untouched and unaware, the information was not easily available. All the primary information included in the project is completely based on the data offered by
the applicants through survey analysis.
50
Ch.4 RESEARCH METHODOLOGY
Research refers to a search for knowledge. It is a systematic method of collecting and recording the facts in the form of numerical data relevant to the formulated problem and arriving at certain conclusions over the problem based on collected data. Thus formulation of the problem is the first and foremost step in the researc process h followed by the collection, recording, tabulation and analysis and drawing the conclusions. The problem formulation starts with defining the problem or number of problems in the functional area. To detect the functional area and locate the exact problem is most important part of any research as the whole research is based on the problem. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research. The research type will be the descriptive research about the needs and preferences about the micro insurance to the potential target people in Indore. DRAFTING QUESTIONNAIRE The questionnaire is considered as the most important thing in a survey operation. Hence it should be carefully constructed. Structured questionnaire consist of only fixed alternative questions. Such type of questionnaire is inexpensive to analysis and easy to administer. All questions are closed ended. In this research the questionnaire is structured and close ende d questionnaire.
DATA COLLECTION
The task of data collection begins after the research problem has been defined and research design chalked out. While deciding the method of data collection to be used for the study, the researcher should keep in mind two types of data viz. Primary and secondary data. 1. Primary Data: The primary data are those, which are collected afresh and for the first time and thus happen to be original in character. The primary data were collected through well -designed and structured questionnaires based on the objectives.
51
2. Secondary Data: The secondary data are those, which have already been collected by someone else and passed through statistical process. The secondary data required of the research was collected through various newspapers, and Internet etc. SAMPLING It was divided into following parts: 1. Sampling Universe: All the low income groups of Baroda are the sampling universe for the Research. 2. Sampling Technique: Judgmental sampling:- Sample was taken on judgmental basis. The advantage of sampling are that it is much less costly, quicker and analysis will become easier. Sample size taken was 100 residents of Baroda.
Data Analysis
The data collected based on structured questionnaire is recorded on an excel sheet and with the help of software a pie chart analysis along with pillar data analysis is generated and based on this findings a qualitative inferences are made for each analysis. The same is being presented in form of graphs and tables.
52
Ch.5. ANALYSIS AND INTERPRETATION

In this section of the research all the primary data are analyzed with the help of various Charts like Column chart, Pie charts and Bar graphs.
1. Respondent Age group:-
Age Group
Below 25 25-35 35-45 More Than 45
Respondent
22 41 19 18
Age Group
45 40 35 30 25 20 15 10 5 0
41
22
19
18
Below 25
25-35
35-45
More Than 45
Respondant
Interface:
As we know from the graph of respondents age group that it covers majority betweengroups of 25-35 years say 41. Only 18 respondents are more than age 45.
53
2: Educational Qualification Education

Up To S.S.C H.S.C Graduate Post Graduate
Respondent
42 30 21 07
Educ tion
45
40 42
35
30 25 20 15 10 5
30 21 Res o 7 a t
0
Up To S.S.C H.S.C Graduate Post Graduate
Inference:
The above result reveals that majority of respondents i.e. 42% were educated till S.S.C. Higher secondary and the percentage of graduation and post graduation is about to 30%, 21%, 7%
54
3. Micro-insurance awareness:Do you understand micro-insurance? Option Number of respondents

Yes No 31 69
n ss of
ic o Insu nc
31% Yes No 69%
Interface:
As we can see from above pie chart only 31% respondents are aware of the Micro insurance.
55
4. Source of information:Source Television Newspaper Company Agent Other Respondent 41 27 18 14
Sour es of nformation
14 18 41
Television Newspaper Company Agent
27
ther
Inference:
The result above reveals that 41% of the respondent got the information about insurancefrom Watching TV, 27% got info from Newspaper, 18 respondents got it from the company agent.least from Banners & Hoardings,friends,relatives is 14%.
56
5. Holder of micro-insurance policy:Hold? Yes No Respondent 17 83
90 80 70 60 50 40 30 20
17
Yes
Interface:
From this graph one can find that only 17% respondents have the micro insurance policy. Others does not hold policy.
H ld
Of P licy
83
Respondent
57
6. Company of Micro-insurance Policy: Company

LIC ICICI Kotak Mahindra Life insurance Others
Respondent
76 6 6 12
Respondent
12 6 6
LI
I I I otak a i ra Life i s ra ce
76
Ot ers
Interface:From the graph, it show that major respondent are having micro-insurance policy of public sector company(LIC) ,which is 79%.7% respondent have Product of ICICI and 5% has Kotak Mahindra life insurance. 9% Respondent have others Company Product like SBI, Birla Sun Life, Met life etc.
58
7. Do you think insurance is / will helpful to you? Option Number of respondents

Yes No May be 56 12 32
View Of Resp ndents

60 50 40 30 20 10 0
2 32
m er of res o
56
Interface:
56% respondent thinks that micro-insurance will helpful in future, 12% Doesnt think so. 32% think that perhaps it will helpful in future.
Yes
y be

e ts
59
8. Respondents Profile:All of the respondents are daily earners, chosen randomly and all of them are male, with age more than 25 years. Maximum respondents are shak-bhajiwala and dairy-wala; some of them are Companys security guards.
What is annual income of respondent? Option Number of respondents Less than 30000 0 30000-60000 54 60000-90000 35 more than 90000 11
Nu
60
er of Respondents
54
50
40 30 20
35
11
10
0
0 Less than 30000 30000-60000 60000-90000 more than 90000
Number of respondents
Interafce
Major portion of respondents belongs to income group 30000-60000; no respondent having less than 30000 annual salary.only 11 respondents family income is more than ninety thousands.
60
9.
Which mode of payment will you prefer for premium? Option Number of respondents Annual 10 Quarterly 19 41 Semi annually 30 Monthly
Payment Method
9 9 23 Annual Semi annually uartely Monthly
59
Interface:
Most of the respondent has to pay Premium amount 59% is semi annually., 23% respondent have pay by Annualy.
61
10. How much premium you are paying/will prefer annually for insurance? Option Number of respondents Less than 1000 0 1000-3000 09 3000-5000 56 More than 5000 35
remium Of Respondant
50 45 40 35 30 25 20 5 0 5 0
47
35
12 6
Number of respondents
Interface
As we can see 47% of respondents are ready to invest daily more than 5000 Rs. for investment in insurance, 37 % of respondents wants to pay 3000 to 5000 Rs for premium, premium amount between 1000-3000 is chosen by only 9 respondents.

62
11. Preference of Respondent:Criteria/Rank Death Benefit Childrens Future Retirement Planning Tax Planning other Respondent 35 21 19 07 16
Respondent's View
16 7 35
Death Benefit Childrens Future
Retirement lanning
19 21
Tax lanning other
Interface
Major respondent have choose micro-insurance policy for death benefit say 35%, 19% have for retirement benefit and 21% for their childrens future.
63
12. Insurance Type: Criteria Only Unit Linked Only Traditional Both Respondents 53 20 27
Type of Policy
27
Only Unit Linked Only Traditional 53
Both
20
Interface:
Maximum respondents have the ULIP policy and 27% have included both type of policy. They also hold separate Unit Linked and Traditional also.
64
13. Investment View
C oice/Rank Mutual Fund Insurance Post Office Bank Deposit Other
Investment View 9 25 3 46 17
I vest ent ie
17 9
Mutual Fund
25 Insurance Post Office ank e osit
Ot er
46 3
Interface:
Major respondent have investing their amount in order like Bank deposit (46%), Insurance (25%) and in the mutual Fund Investment (9%).
65
14 factor Affecting while taking Policy
riteria/Rank Premium Return Safety Liquidity Market Condition
Respondent view 23 42 16 11 8
Res
8 11
ndent vie
23
Premium Return Safety Liquidity arket

42
16
ondition
Interfece;
While purchasing the policy majority respondent have expected for the higher return, it is 42%, second factor affected is its premium amount.
15. Satisfaction with micro-Insurance? Criteria Yes No Indu Management Institute Respondents 78 22
66
Satisfy?
90
80 70 78
60
50 40 30 20 0 0 22 Respondents
Interface:
78% respondent having satisfied with its current micro-insurance policy, and rest are not much satisfy.
!
67
Yes
16. Delivery Model Criteria Partner Agent Model Full Service Model Provider Driven Model Community Based Model Res o 41 25 23 11 e ts
Respondents
45 41
11
Partner Agent Model
Full Service Provider Model Driven Model
Community Based Model
Interface:
From the primary data, it observes that if company choose the partner agent model, It will be very beneficial for the company to deliver its product to the rural area .
# $# "
40 35 30 25 20 15 10 5 0
25
23
Res o e ts
68
Ch 6. FINDINGS
h Income level lies between 150-350 bugs per day. h Majority of respondent had bank account and very less had both post office as well as DMAT
account.
h Majority of respondent having earning is more than 60000 par annual.
h Majority respondents are ready to invest annually more than 5000 Rs. for investment in
insurance
h All of them are aware about insurance but not about micro insurance and bestsource of
information medium found to be newspaper, television and from friends & relatives.
h Many of respondents were not insured just because of either high premium r lack of o
complete information.
h Respondent has more focus on return of its investment in micro-insurance policy. h Apart from all delivery model, the partner-agent model is best one to suit it because it has
limited risk as compare to others model.
69
Ch.7 Recommendation & Suggestion
The micro insurance frame work in India needs a deeper reach so that it can help the most needed people, following suggestion can make the regulation more effective .
Leveraging Existing Network for Micro-Insurance

It would be difficult for the insurers to establish a vast network for distributi n of microo insurance products. They need to utilize existing Government organizations, banks, MFIs, NGOs and SHGs to increase the outreach of micro insurance to the poor. The advantages of these entities are that they find greater acceptability among the financially excluded, and with a better understanding of their needs are well equipped to advise them on the choice of products. In India with a vast rural population characterized by challenges and complexities, it makes sense to latch on to an existing m echanism operating in these segments to lower costs and to help the insurer to leverage on the faith already generated by the entity. Hence it would be prudent to choose a partner-agent model for delivery where the insurer underwrites The risk and the distribution is handled by an existing intermediary. This model keeps the cost of insurance attractive enough for the poor to enter and remain in its fold even while addressing the concern of the insurers about the low returns of micro -insurance.
Linking Micro-credit with Micro-insurance

It is becoming increasingly clear that micro -insurance needs a further push and guidance from the Regulator as well as the Government. The Committee concurs with the view that offering microcredit without micro-insurance is bad financial behaviour, as it is the poor who suffer on account of such bad product design. There is, therefore, a need to emphasise linking of microcredit with micro-insurance. Linking micro-insurance with micro-finance makes good business sense. Further, as it helps in bringing down the inherent risk cost of lending, the Committee feels that NABARD should be regularly involved in issues relating to rural and micro insurance to leverage on its experience of being a catalyst in the field of micro credit.
70
IRDAs Regulations on Micro-Insurance

Building on the recommendations of the consultative group, IRDA notified Micro-Insurance Regulations on 10th November 2005 with the following key features to promote and regulate micro-insurance products. The regulations focus on the direction, design and delivery of the products: A tie-up between life and non life insurance players for integration of product to address risks to the individual, his family, his assets and habitat, Monitoring product design through file and use, Breakthrough in distribution channels with inclusion of NGOs, SHGs, MFIs and PACS to provide micro-insurance, with appropriate compensation for their services, Enlarged servicing activities entrusted to micro-insurance agents, Issue of policy documents in simple vernacular language. Currently the IRDA regulations do not favor composite insurance (i.e., life and non-life insurances by the same company) and also limit the agency tie-up to one life and one non-life insurer. However, in recognition of the uniqueness of micro102 insurance, these regulations enable life and non-life companies to tie-up for offering a combined policy in rural areas. Further, the IRDA has allowed insurers to issue policies with a maximum cover of Rs. 50,000 for general and life insurance under these regulations. The regulations have also eased the norms for entry of agents relating to training and pre-recruitment examination. As an attraction, remuneration to agents has also been leveled across the term of the policy.
Some of the recommendations could be:

1. Simplification of products and bundling where requires making them easy to understand,
easy to use, sill and service.
2. Simplifying and making premium payment plans flexible to suit the needs. 3. Focus on volumes by targeting large groups. 4. Innovations are required at all stages for products, in pricing policy and in delivery
channels
5. Success of marketing micro insurance depends on understanding the social and cultural
needs of the target population
6. Integrating micro finance activities with micro insurance for a most beneficial outcome.
71
7. Claim settlement to be timely, simple and transparent. 8. Maximizing the benefit of connectivity revolution in rural India to reach the un-served
markets. Using additional innovative distribution channels to achieve cost-efficiency in agricultural markets.
72
Ch.8. CONCLUSION
We all know insurance is a very old concept. But the demand for insurance was increased from a decade. Middle class people take insurance policy according to their ability & capacity to pay premium to secure their life. When we talk about low income people a question comes in mind Do poor people have any security? What if they face any risk? Who is going to look after them? Their family members? Do they have any insurance policy? Are they capable to pay the premium? The answer for this is Micro Insurance. Micro Insurance is designed keeping in mind to poor people. Like everybody else, the poor people face a variety of risks such as risk of death, illness, disability, accident, income & property & so on. Like all other, they also need to be protected from these risks. Policy-induced and institutional innovations are promoting insurance among the low -income people who form a sizable sector of the population and who are mostly without any social security cover. Although the current reach of micro -insurance is limited, the early trend in this respect suggests that the insurance companies, both public and private, operati with ng commercial considerations, can insure a significant percentage of the poor. Serving low income people who can pay the premium certainly makes a sound commercial sense to insurance providers. To that extent imposing social and rural obligations by nsurance i regulator (IRDA) is helping all insurance companies appreciate the vast untapped potential in serving the lower end of the market. At present microfinance business in the country is unregulated. Regulation of MFIs is needed not only to promote micro-finance activity in the country but also to promote the linking of micro-insurance with micro-finance. It is becoming increasingly clear that micro-insurance needs a further push and guidance from the regulator as well as the government.
73
Ch.9. BIBILIOGRAPHY
1. BOOKS:
K.R. Ratan Micro Insurance IGNO publication 2008 pp87. Banking & Insurance II (Thakur Prakashan).
2. Journal: IRDA journel 2007 Focus Micro Insurance 3. Website: www.scribd.com www.Mbaguys.net www.mbaproject.com 4. Articles: Concept Paper on Need for Developing Micro-Insurance in India
74
Ch.10. Questioner
In view of this, I hereby request you to give your feedback on thequestionnaire given below. Please note that your response will be kept confidential. Please mark the appropriate answer.
Personal Profile:
1). 2). : : .
- ...... ..
3) :-
4) 5)
. .
. .
6)
:-
Questionnaire:Q: 1.
A) [ ]
B) [ ] ?
Q: 2. Criteria
Respondents
% %% %
?
&& & & & &

75
% %% % %% % %%% %% %% %% % %%% & & && &
Q: 3
A) [ ]
B) [ ]
Q: 4. Company
LIC ICICI Prud. Life Kotak Mahindra Other
Respondents
Q: 5
A)
[ ]
B)
[ ]
Q: 6.
. .
? . .
Q: 7 1) 3) Q: 8. Criteria/Rank 1 2 [ ] [ ] 4) ! 2) [ ]
[ ]
76
Q: 9
' '
'
'
Criteria
' ' . ' '
Respondents
Q: 10 Criteria/Rank 1 2 3 4 5
Q: 11.
?( ).
Criteria/Rank
Q: 12.
? A) [ ] B) [ ]
77
Q: 13.
A) [ ] B) [ ]
Q: 14
?
Criteria
)
Tick mark
Q: 15.
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78

Kamlesh Prajapati Grand Project Report of Mba

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COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

COMPREHENSIVE PROJECT REPORT ON MICROINSURANCE

Indu Management Institute

E PROJECT REPORT ON MICRO INSURANCE

Place: Vadodara Date: 30/05/2011

Indu Management Institute

COMPRE ENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Introduction Literature Review Objective Of Study

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Traditional Insurance Clients

Low risk environment. Established insurance culture

High risk exposure/ high vulnerability,

Weak insurance culture

Distribution y Sold by licensed intermediaries ory Sold by non traditional model

Complex policy documents with Simple language y many exclusions

Premium calculation Premium

Good statistical data

Pricing based on Individual risk y

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

adapted to volatile cash flow of clients

Often linked with other transaction (e.g. loan repayment

y y insurance risk Significant documentation required Limited but effective control

(adverse selection, moral hazards, frauds) Claims handling

Screening such as medical test y Insurance risk included in premium is required

rather than exclusion Linked to other service (like credit)

Complicated process Extensive verification documentation

Simple and fast procedure of small firms.

Efficient fraud control

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

HISTORY & VISION

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

SCOPE AND FUNCTIONS

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Salient features of Micro-insurance:

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Development of Micro-insurance in India

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Micro Insurance Delivery Models

1. Partner agent model:

2. Full service model:

Indu Management Institute

COMPREHENSIVE PROJECT REPORT ON MICRO INSURANCE

Indu Management Institute

(2).Bajaj Allianz Life Insurance Co. Ltd Jana Vikas Yojana

Saral Suraksha Yojana

Alp Nivesh Yojana