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MATS SCHOOL OF BUSINESS, BANGALORE 1 Micro Insurance An Approach to Serve the Poor

Micro Insurance

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slides deals with the micro insurance part dats what excatly is micro finance and try to discuss different issue wid it...

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Page 1: Micro Insurance

MATS SCHOOL OF BUSINESS, BANGALORE

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Micro InsuranceAn Approach to Serve the

Poor

Page 2: Micro Insurance

MATS SCHOOL OF BUSINESS, BANGALORE

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Low – income groups are invariably exposed to innumerable risks. Micro insurance works on the phenomenon of risk transfer mechanism characterized by low premiums and low coverage limits.

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MATS SCHOOL OF BUSINESS, BANGALORE

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Agenda… Introduction Need for Micro

Insurance Scenario of Micro

Insurance in India Characteristics of Micro

Insurance Products Opportunities Challenges Ahead Conclusion

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MATS SCHOOL OF BUSINESS, BANGALORE

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Introduction Risk protection Low premiums and low coverage limits Contribution to economic and social inclusion Insurance business growth

94.96% in 2006-07 in comparison to 47.94% in 2005-06

4.10% for life insurance and 0.6% for non life insurance

58% of India’s 105.4 mn insured are from rural area

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MATS SCHOOL OF BUSINESS, BANGALORE

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Need for Micro Insurance

Low income household are predisposed

To protect themselves and their families against different risks

Poor need to be seen as a market Developed countries and Developing

countries New concept for the bottom of pyramid

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MATS SCHOOL OF BUSINESS, BANGALORE

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Scenario of Micro finance in India

Acc. to UNDP – market is nearly 90% of the Indian population.

$2bn market Potential market size 62,304.70 to

84,267.55 mn Only 2% of the poor in country are

covered

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MATS SCHOOL OF BUSINESS, BANGALORE

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Characteristics of Micro Insurance

Group insurance schemes Women’s associations, saving and

credit groups, cooperatives and the like

Flexible mode of premium payments

Distribution channel

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MATS SCHOOL OF BUSINESS, BANGALORE

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Products Life micro insurance

Covers not only the loan amount, also includes funerals benefits for the policyholder and family member sometimes

Health micro insurance Coverage against till health and maternity for direct

and indirect medical costs Disability micro insurance

Linked with death cover in personal accident products Agriculture micro insurance

Aims at protecting farmers from seasonal variability Composite Products

Related to grouping of life, health and assets protections

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MATS SCHOOL OF BUSINESS, BANGALORE

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Opportunities

Potential area growth and development by insurer and practitioners

New distribution channel Self-employed Public and private insurance player

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MATS SCHOOL OF BUSINESS, BANGALORE

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Challenges Transaction cost

High administrative cost Distribution systems

Distribution systems of most insurers not designed to serve low income market

Products Absences of exclusive products

Regulatory Environment Require new regulatory environment

Customer Education and Awareness Reinsurance

In order to minimize the risk Fraud

Customer and channel partners

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Conclusion

Poor no longer consider as non bankable

Subset of microfinance Combination with savings and

micro credit

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MATS SCHOOL OF BUSINESS, BANGALORE

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Thank you…

Akash k. sonkar