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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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MATS SCHOOL OF BUSINESS, BANGALORE
1
Micro InsuranceAn Approach to Serve the
Poor
MATS SCHOOL OF BUSINESS, BANGALORE
2
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.
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
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
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
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
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
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
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
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
MATS SCHOOL OF BUSINESS, BANGALORE
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Conclusion
Poor no longer consider as non bankable
Subset of microfinance Combination with savings and
micro credit
MATS SCHOOL OF BUSINESS, BANGALORE
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Thank you…
Akash k. sonkar