Dig­i­tal dis­tri­bu­tion

Leading gen­eral in­surance com­pa­nies in In­dia share their strategies to serve ru­ral mar­kets:

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“The fu­ture of In­dia lies in its vil­lages,”

Ma­hatma Gandhi had af­firmed as he vi­su­al­ized the tremen­dous growth op­por­tu­ni­ties of ru­ral In­dia. As per a Whar­ton Study, since 2000 the ru­ral GDP at 6.2% CAGR has grown faster than ur­ban GDP at 4.7%. The ru­ral con­sump­tion per per­son has in­creased by 19% per an­num be­tween 2009 and 2012, with ru­ral In­dia spend­ing higher than the ur­ban seg­ment. This con­sump­tion pat­tern for ru­ral cus­tomers re­sulted in shift­ing from ne­ces­si­ties to dis­cre­tionary goods and life­style prod­ucts, in­clud­ing mo­bile phones, tele­vi­sion sets and 2-wheel­ers. These fac­tors have boosted the growth in mo­tor in­surance; health in­surance is also gain­ing trac­tion due to chang­ing life­style of ru­ral cus­tomers.

Agri­cul­ture, the tra­di­tional in­come source for ru­ral In­dia, has pushed the de­mand for crop in­surance un­der Pradhan Mantri Fasal Bima Yo­jana (PMFBY). Farm­ers’ pack­age pol­icy and cat­tle in­surance are also the other pop­u­lar in­surance prod­ucts among the ru­ral cus­tomers.


In fi­nan­cial year 2016-17, the gen­eral in­surance in­dus­try in In­dia had reg­is­tered a pre­mium growth of 32.43%. Ta­pan Singhel, MD & CEO at Ba­jaj Al­lianz Gen­eral In­surance Com­pany, says n FY 16-17, 14% of the com­pany’s to­tal busi­ness came from the ru­ral mar­kets. “We have seen a growth of over 40% in our busi­ness from ru­ral ar­eas, mainly due to the boost given to crop in­surance by gov­ern­ment through schemes, like Pradhan Mantri Fasal Bima Yo­jana. We had re­ceived ma­jor­ity of our busi­ness from the states like Ma­ha­rash­tra, Andhra Pradesh, Bi­har, Haryana, Te­lan­gana and Ch­hat­tis­garh, since we were present in these ar­eas for crop in­surance,” says he. HDFC Gen­eral In­surance reg­is­tered a 57% growth from ru­ral mar­kets, which is pri­mar­ily contributed by crop in­surance sales in Mad­hya Pradesh, Gu­jarat and Ma­ha­rash­tra. Anuj Tyagi, ED at HDFC ERGO Gen­eral In­surance, says the com­pany has gen­er­ated growth with the help of banks and 21,000 com­mon ser­vice cen­ters (CSC) in the ru­ral mar­kets.

Uni­ver­sal Sompo Gen­eral In­surance too reg­is­tered pre­mium growth of 42.43% with net writ­ten busi­ness of about `1287 crore. The com­pany could get about of `578.50 crore worth pre­mium from ru­ral ar­eas, in­clud­ing crop in­surance, which com­prised around 45% of the to­tal busi­ness. The com­pany also pro­vides cat­tle in­surance, farm­ers’ pack­age in­surance and poul­try in­surance. To ben­e­fit ru­ral In­dia, it has also de­signed sim­ple in­surance plans like Saral Su­rak­sha and Janta Per­sonal Ac­ci­dent poli­cies, for the ben­e­fit of ru­ral res­i­dents dur­ing the time of health dis­tress or a sud­den loss of life of the in­sured.

Ra­jiv Ku­mar, MD & CEO at Uni­ver­sal Sompo Gen­eral In­surance says: “In FY 2016-17, we have is­sued around 30,000 cat­tle in­surance poli­cies and more the 11,000 farm­ers’ pack­age poli­cies across the coun­try. We have also cov­ered more than 10 lakh lives through our Janta Per­sonal Ac­ci­dent pol­icy and more than 3 lakh lives through Saral Su­rakha in the pre­vi­ous year. Crop in­surance is a ‘ten­der’ based busi­ness, so for the crop busi­ness, most of the pre­mium had em­anated from Kar­nataka state, which was al­lot­ted to us by the min­istry of agri­cul­ture in FY16-17. For other ru­ral in­surance prod­ucts, we have gen­er­ated busi­ness across In­dia through our prime bac-as­sur­ance chan­nel fol­lowed by other modes of busi­ness dis­tri­bu­tion.”

He main­tains that the com­pany has writ­ten rel­a­tively more cat­tle in­surance busi­ness in Tamil Nadu, Kar­nataka and Ut­tar Pradesh (Luc­know re­gion), while farm­ers’ pack­age poli­cies are rel­a­tively pop­u­lar. The pre­mium writ­ten busi­ness from Saral Su­rak­sha Bima Yo­jana is high from Ut­tar Pradesh while rel­a­tively more dig­i­tized states like Andhra Pradesh, Ut­tar Pradesh and Ma­ha­rash­tra con­trib­ute ma­jor busi­ness through the CSC dis­tri­bu­tion chan­nels, he adds.


Ru­ral cus­tomers have al­ways had a good pur­chas­ing power; how­ever, there has been an in­crease in pur­chase and con­sump­tion of con­sumer durables and smart phones. More­over, many easy fi­nance op­tions and ac­cess to e-com­merce mar­ket plat­forms have made it sim­pler for con­sumers in these ar­eas to ac­cess qual­ity/branded prod­ucts. The ru­ral mar­ket is not a mo­bile

first mar­ket, it’s a mo­bile only mar­ket as far as ac­cess to in­ter­net is con­cerned. The de­mand of 2-wheel­ers, 4-wheel­ers and trac­tors is grow­ing rapidly in these ar­eas.

How will an in­surance com­pany to re­spond to these ru­ral trends? Ra­jiv Ku­mar says his com­pany has in­tro­duced Uni­fied Pack­age In­surance Scheme (UPIS), which cov­ers all the as­sets of the farmer like the crop, dwelling and its con­tents both against fire and theft. This pol­icy also pro­vides protection to the farmer and his le­gal heir in case of ac­ci­den­tal death or per­ma­nent dis­able­ment to the in­sured. Such in­surance poli­cies are likely to gain mo­men­tum in fu­ture con­sid­er­ing the evolv­ing de­mand among farm­ers who are now look­ing for in­surance ben­e­fits for more of their as­sets be­yond crop in­surance, he feels.


The buy­ing pref­er­ences of In­dia’s ru­ral con­sumers is chang­ing fast on ac­count of eco­nomic, so­cial and tech­no­log­i­cal fac­tors. Ru­ral con­sumers’ in­come lev­els are on the rise too, en­abling more of them to buy prod­ucts and ser­vices that im­prove the qual­ity of their lives. There has also been a shift in the aware­ness lev­els among the ru­ral con­sumer due to mul­ti­ple me­dia plat­forms that ini­ti­ate aware­ness which has played a vi­tal role in ru­ral In­dia’s val­ues and at­ti­tudes.

Ta­pan Singhel re­veals the main re­quire­ments of the ru­ral cus­tomers: “Ru­ral cus­tomers usu­ally buy in­surance through their banks, mainly for live­stock, farm­ing equip­ment like trac­tors, agri­cul­tural pump sets, 2-wheel­ers and cars. Now, there is a broader con­sump­tion of in­surance through gov­ern­ment schemes and fi­nan­cial in­clu­sion, es­pe­cially for crop in­surance, (PMFBY) and where opted, for per­sonal ac­ci­dent as well (PMSBY).”


Gen­eral in­surance com­pa­nies use in­dus­try data and data pro­vided by the gov­ern­ment to tar­get ru­ral ar­eas. They also take in­sights from chan­nel part­ners, ex­perts and con­sul­tants. Anuj Tyagi from HDFC Ergo ex­plains how the chan­nels used to col­lect cus­tomer in­sights: “We work in the field di­rectly with cus­tomers for sell­ing crop in­surance. This gives a good per­spec­tive of their ex­pec­ta­tions. We also use other chan­nels like busi­ness cor­re­spon­dents and CSC cen­ters to col­lect in­for­ma­tion, as they are in touch with cus­tomers on a pe­ri­odic ba­sis for var­i­ous fi­nan­cial prod­uct needs.”

Uni­ver­sal Sompo uses the ban­cas­sur­ance chan­nel to col­lect cus­tomer in­sights. Its bank part­ners are Al­la­habad Bank, In­dian Over­seas Bank and Kar­nataka Bank, which have a com­bined ge­o­graphic reach of al­most all the dis­tricts of the coun­try. Ra­jiv Ku­mar says the com­pany has in place an ef­fi­cient dis­tri­bu­tion net­work to tar­get and serve ru­ral cus­tomers through its ex­ten­sive branch net­work of part­ner banks, as well as, through tie-ups with CSCs. It also makes use of PoS agents to sell in­surance prod­ucts. “This net­work serves a dual pur­pose. First, it helps in prospect­ing and on-board­ing cus­tomers and se­condly it helps in read­ing the pulse of ru­ral cus­tomers. The part­ner bank branches help us to gain in­sights around the fi­nan­cial and con­sump­tion pat­terns of ru­ral cus­tomers based on their pref­er­ences for var­i­ous loan-based prod­ucts. The Vil­lage Level En­trepreneurs (VLE) and PoS agents work as trusted per­sonal ad­vi­sors to ru­ral cus­tomers and thus help us in gain­ing in­sights on cus­tomer pref­er­ences and buy­ing be­hav­ior,” says he.


In the past, ru­ral cus­tomers pre­ferred pay­ments by cash or cheques for small trans­ac­tions. Now, this pref­er­ence is shift­ing to on­line and dig­i­tal plat­forms. CSCs and banks are cre­at­ing the nec­es­sary aware­ness and in­fra­struc­ture for dig­i­tal trans­ac­tions and pay­ments in ru­ral ar­eas,

pri­mar­ily as fa­cil­i­ta­tors and in the long run as trans­form­ers. Says Anuj Tyagi: “In ru­ral ar­eas, cash is still the pre­dom­i­nant method of pay­ment. How­ever, with the in­creased spread and aware­ness about mo­bile wal­lets, cus­tomers have started mak­ing use of al­ter­nate modes of pay­ments op­er­ated di­rectly or via in­ter­me­di­aries. We have been no­ti­fied to im­ple­ment the PMFBY scheme in Ma­ha­rash­tra, Mad­hya Pradesh and Andhra Pradesh for this year. In ad­di­tion to these mar­kets we are also ex­pect­ing to gain mo­men­tum in eastern and south­ern states of In­dia.”

Ac­cord­ing to Ra­jiv Ku­mar, the pre­ferred pay­ment chan­nel among the ru­ral cus­tomers is ‘cheque’ which is de­posited at re­spec­tive branches of the com­pany or routed through part­ner banks. The pol­i­cy­hold­ers as­so­ci­ated with re­spec­tive banks pri­mar­ily make pay­ments to the re­spec­tive bank to­wards in­surance which ul­ti­mately is re­ceived by the com­pany. They also use other on­line chan­nels through CSCs and PoS agents. The com­pany has pro­vided on­line in­te­gra­tion of pay­ment meth­ods through con­cerned banks. The com­pany also helps poor house­holds to pur­chase in­surance poli­cies in cash which is been routed through re­spec­tive Vil­lage Level En­trepreneurs.


Dig­i­tized dis­tri­bu­tion mod­els are help­ing gen­eral in­surance com­pa­nies to reach out to ru­ral cus­tomers at their door step. In the last cou­ple of years, dig­i­ti­za­tion has es­sen­tially trans­formed the in­surance busi­ness model and has pro­vided im­mense op­por­tu­ni­ties to reach out to the un­der­served and un­der­in­sured ru­ral mar­ket.

Ba­jaj Al­lianz has been able to reach out to over 200 new mar­kets in 201617 as a re­sult of its key ini­tia­tive ‘Vir­tual Of­fice.’ It is an en­tire of­fice in­te­grated into a tablet that helps the com­pany to be present in the re­motest cor­ners of the coun­try to im­prove dis­tri­bu­tion. It is a cost-ef­fec­tive dis­tri­bu­tion model since it does not need brick and mor­tar of­fices. Says Ta­pan Singhel: “We have equipped our chan­nel part­ners and sales force with mo­bile apps like Eezee Tabs to take in­surance to the cus­tomers’ doorsteps. They can sell re­tail prod­ucts through this and pro­vide them with end to end so­lu­tions like pol­icy is­suance, pre-in­spec­tion and even set­tle mi­nor claims through this app. Apart from that, the com­pany’s self-ser­vice mo­bile app In­surance Wal­let en­ables all our cus­tomers to con­duct and store all their in­surance re­lated trans­ac­tions and in­for­ma­tion seam­lessly on a re­al­time ba­sis. It pro­vides easy ac­cess to any prod­uct re­lated in­for­ma­tion and is an in­ter­face that al­lows them to reach out to us in­stantly.” Ba­jaj Al­lianz also con­ducts var­i­ous cus­tomer aware­ness pro­grams to ed­u­cate its cus­tomers about in­surance, be it cam­paigns in schools, or in tier 2&3 cities along with chan­nel part­ners.”

Uni­ver­sal Sompo Gen­eral In­surance has de­vel­oped IT in­fra­struc­ture at more than 6000 bank branches on a pan In­dia ba­sis and is con­sis­tently up­grad­ing this to im­prove its ef­fi­ciency. The banks have bank­ing cor­re­spon­dents in ru­ral In­dia, who func­tion as touch points for var­i­ous bank­ing trans­ac­tions. In fu­ture, the com­pany has plans to be as­so­ci­ated di­rectly with the bank­ing cor­re­spon­dents. In 201718, it is plan­ning to strengthen its PoS and in­surance mar­ket­ing firms as dis­tri­bu­tion chan­nels for tap­ping ru­ral busi­ness. So far, it has al­ready got an ap­proval for 14 prod­ucts to be sold via PoS chan­nel and is re­ceiv­ing good re­sponse from cus­tomers.

“In or­der to lever­age the emerg­ing dis­tri­bu­tion chan­nels, we are grad­u­ally re­fin­ing our dis­tri­bu­tion strat­egy. We have al­ready strate­gized busi­ness via web ag­gre­ga­tor and CSC chan­nels with pre­mium growth of 364.45% and 1587.87% re­spec­tively in FY 2016-17. This has in­creased our pres­ence among on­line buy­ers and in ru­ral/semi ur­ban In­dia. We are con­sis­tently work­ing on our prod­uct port­fo­lio and we have so far in­tro­duced 13 prod­ucts (to be sold through CSC) in the cur­rent fi­nan­cial year,” says Ra­jiv Ku­mar. He de­scribed an­other in­no­va­tion: “With the in­creas­ing pen­e­tra­tion of smart phones and in­ter­net/data con­nec­tiv­ity in the ru­ral hin­ter­land, we have also de­vel­oped M-PoS ap­pli­ca­tion for our POS-Per­son, which will help vil­lagers to get the in­surance pol­icy at their fin­ger­tips.”

Anuj Tyagi says HDFC ERGO reached out to ru­ral cus­tomers us­ing tech­nol­o­gy­based en­rol­ment ap­pli­ca­tions which are faster and re­quire less ad­min­is­tra­tive sup­port. Within the CSC plat­form all the prod­ucts are com­pletely on­line and the cus­tomer has the ease of pay­ment and gets the pol­icy on the spot. The com­pany also uses a mo­bile ap­pli­ca­tion for claims as­sess­ment sur­veys in prod­ucts such as crop and live­stock.

Clearly, the pre­ferred dis­tri­bu­tion chan­nels in ru­ral ar­eas are dif­fer­ent from the ur­ban ar­eas.


The gen­eral in­surance com­pa­nies agree that in­surance is very low on the pur­chase pri­or­ity of the ru­ral cus­tomers, and in­ef­fec­tive dis­tri­bu­tion and aware­ness are the pos­si­ble rea­sons for it. This is some­thing that the in­dus­try has to work on. There is a lack of con­sumer aware­ness about the need for risk protection and un­avail­abil­ity of the re­quired in­fra­struc­ture in the ru­ral ar­eas of In­dia. Gov­ern­ment as well as in­sur­ers are work­ing to­wards im­prov­ing this sit­u­a­tion, and the cur­rent sce­nario will surely change in the com­ing days.

Ra­jiv Ku­mar re­veals his com­pany has writ­ten more cat­tle in­surance busi­ness and farm­ers’ pack­age poli­cies

In­sur­ers see big scope in cat­tle in­surance

Ta­pan Singhel claims there is broader con­sump­tion of in­surance through gov­ern­ment schemes and fi­nan­cial in­clu­sion

Anuj Tyagi stresses on the im­por­tance of tech­nol­o­gy­based en­rol­ment ap­pli­ca­tions which are faster and re­quire less ad­min­is­tra­tive sup­port

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