Bajaj Allianz Micro Insurance Initiative - India Case · PDF fileBajaj Allianz Micro Insurance...
Transcript of Bajaj Allianz Micro Insurance Initiative - India Case · PDF fileBajaj Allianz Micro Insurance...
Bajaj Allianz Micro Insurance Initiative - India Case Study
9th International Micro Insurance Conference 2013 14th November 2013, Jakarta
Presented by - Yogesh Gupta Senior Vice President & Head Business Procurement, Micro & Mass Market
Opportunity: Lower middle income group
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Emerging Trend: Opportunity at the ' forgotten’ Middle of the Pyramid
“9th International Microinsurance Conference 2013, Jakarta”
Only 5% of the Indian population is covered with some
sort of insurance cover
In India, Social Security Is virtually non existent
This means that Close to 800 million
People in Rural India have no insurance
access
There is an urgent need to provide insurance
protection to these individuals
India: Economic Snapshot
This segment of the country largely has no access to the financial services.
--------------------------------------- Large part of this population,
which is below poverty line are without savings, credit or insurance services.
Our company operates in a country where 32.7% of the population fall below the international poverty line of US$ 1.25 per day while 68.7% live on less than US$ 2 per day.
Source: UNDP, World Bank 2010 Report
• Limited availability of documents to determine health, age & primary education levels.
Documentation
• Erratic and seasonal income hence lapsation trends can be higher than normal
Income Patterns
• Efficient mechanisms for collecting premiums as little as US$ 1 per month against yearly premium
Small Ticket Sizes
• Simple to understand as the target audience is largely financially illiterate
• Low awareness
Customer Profile
Challenges : Product Design - Rural Market
“9th International Microinsurance Conference 2013, Jakarta”
How do we measure against these parameters??
Product Development Dashboard – An Innovative Micro Savings Product
Affordable
Wide Coverage across ages
Flexible
Minimal documentation for enrollment and claims
Safety of Investment and competitive yield
Individuals between the age of 0-65 male and female can be covered.
Available in small premium sizes Rs 45 (Less than $ 1 per month)
Low Surrender Penalty Premium withdrawal at any point during the policy tenure Non-forfeiture of premiums and continuation of policy Both regular and single premium payment options available
Affordable
Wide Coverage across ages
Flexible
Safety of Investment and Competitive Yield
Capital Guarantee on the net investment premium 0% Equity exposure across the fund Returns declared on the existing fund. of 8.3% - 8.8% in last 5 years
“9th International Microinsurance Conference 2013, Jakarta”
How would one define a good savings plan??
Our Flagship Micro Insurance Product Innovation
“Sarve Shakti Suraksha”
which stands for…
“Securing & Empowering Everyone”
Launched - April’2008
Nos of Lives Covered – More than 7 Million
“9th International Microinsurance Conference 2013, Jakarta”
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Key Product Features
Non Forfeiture of Premiums SSS (Sarve Shakti Suraksha ) – Over the
Counter Solution( OTC) Risk coverage with savings options Minimum Sum Assured per annum: Rs
2500 Minimum product term: 5 years Eligibility- Between 0-65 years Low Premium: Rs 45 (Less than $1per
month) Minimal documentation at the time of
product enrollment & Claims. Rider Available – ADB & ADDB
Incase of Death of the member- Sum Assured plus the account value of the customers investment
On Maturity Value - The account value subject to the minimum maturity guarantee,
Sarve Shakti Suraksha - Simplistic & Customer Centric
“9th International Microinsurance Conference 2013, Jakarta”
Low Surrender Penalty
Easy Revival without Penalty
Loan Against Policy
Non Medical Underwriting
Easy Enrollment by just filling One Pager form with on the spot “Welcome Letter”
“Over the Counter (OTC) Solution”
“Standard Premium Across all Ages”
Yet Another “Hit” in Micro Insurance & Financial Inclusion
Group Term Life Product
“9th International Microinsurance Conference 2013, Jakarta”
• Depending on the group, underwriting rate is set by the company ’ s underwriter • Varies based on group demographics
• Sum Insured: Minimum INR 1000, no limit on maximum coverage • Risks covered: Natural and accidental death • Disability rider is optional (but rarely implemented in microfin ance context) • MFIs deduct the outstanding loan balance (if any) from the sum i nsured
• Group Insurance
• An insurance product designed to provide risk protection against natural death to the end customer
• Other benefits include an accidental death & disability rider
• Non - bank Microfinance Institutions (MFIs) & Common Service Centers
• India
• Pure Risk Insurance coverage for a period of one year
• Group Term Life
Group or individual product
Covered risks & benefits / sum insured
Premium range (min, max)
Country
Distribution partner type (e.g. MFIs, banks, coops, retailers)
1 - sentence product description
Product type (e.g. credit life, endowment, motorcycle)
Product name (generic or marketing name)
• Depending on the group, underwriting rate is set by the company’s underwriter ’ • Varies based on group demographics
• Sum Insured: Minimum INR 1000, no limit on maximum coverage • Risks covered: Natural and accidental death • Disability rider is optional (but rarely implemented in microfinance context • MFIs deduct the outstanding loan balance (if any) from the sum insured
• Group Insurance
• An insurance product designed to provide risk protection against natural death to the end customer
• Other benefits include an accidental death & disability rider
• Non - bank Microfinance Institutions (MFIs) & Common Service Centers
• India
• Pure Risk Insurance coverage for a period of one year
• Group Term Life
Group or individual product
Covered risks & benefits / sum insured
Premium range (min, max)
Country
Distribution partner type (e.g. MFIs, banks, coops, retailers)
1 - sentence product description
Product type (e.g. credit life, endowment, motorcycle)
Product name (generic or marketing name)
Nos of Lives Covered – More than 30 Million in last 5 years
• Willing to get associated with service support and policy administration/servcing
• Support the insurer in intimation and resolution of claims and other requirements
Have a service orientation
• Promote financial literacy and insurance awareness through specially designed tools
Promote insurance awareness
• Have a firmly established operation across specified core businesses
• Insurance cant be the sole business activity • Help in buildling Low cost of distribution
Existing distributors of products/services
• Associate with partners operating across these segments
• Have sound knowledge, understanding and access to captive customer databases
• Proper Infrastructure
Collaborate with strategic partners
Product Distribution Approach – Rural Market
“9th International Microinsurance Conference 2013, Jakarta”
Distribution – Our Rural Business Model
Rural Business
Micro Finance
Institutions
Dairy Federation
National E-governance
Plan
Boards & Associations
Credit/ Non Credit
Co-operative Societies
Rural Banks
Business Correspondents
Others
“9th International Microinsurance Conference 2013, Jakarta”
70 Micro Finance Institutions
200 Rural Banks
7 NeGP Players with 60,000 CSCs
10 Key BC Players with target reach to 20 million people
More than 600 Co-op Scocities
We have piloted with 4 key Dairy Boards in Indian
Exploring Coffee/Tea/Sugar Board etc
NGOs, Organisation with Rural Presence such a “Rural Retail”
Rural & Micro Insurance Achievements (As on Sept’13)
“9th International Microinsurance Conference 2013, Jakarta”
Total Nos of Lives Covered in last 5 years : 3.61 Million
Figures are on Financial Yea Wise i.e. 1st April – 31stMarch
Figures as on September’13
1.700.00
1.70 1.370.311.69
0.331.04
1.37
0.814.27
5.08
2.21
15.61
17.81
0.61
7.908.51
7.02
29.14
36.16
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Live
s Co
vere
d (in
Mill
ions
)
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total
Year
No of Lives CoveredSSS GTL Total
Rural & Micro Insurance Achievements (As on Sept’13)
“9th International Microinsurance Conference 2013, Jakarta”
Total New Business Premium Collected in last 5 years : US $ 163.24 Mn Total Corpus under Micro Insurance in last 5 years : US $ 272.67 Mn
1 USD = INR Rs. 60 Figures are on Financial Yea Wise i.e. 1st April – 31stMarch
Figures as on September’13
160.01
16.10
34.720.26
34.98
21.68 1.39
23.07
20.34 5.4125.75
27.57 16.03
43.60
10.249.51 19.75
130.6332.61
163.24
0
50
100
150
200
Prem
ium
( in
USD
Mill
ion)
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total
Year
Micro Insurance New BusinessSSS GTL Total
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Micro Saving Solution – Sarve Shakti Suraksha
• Nos of Claims Received - 27,418 • Nos of Claims Settled - 26,536 • Claims Settlement Ratio (NOP) -96.78% • Claim Received (Amount) -Rs. 174.65 or US $ 29.11 Mn • Claims Settled (Amount) – Rs. 169.10 or US $ 28.18 Mn • Claim Settlement Ratio (NOP) – 96.78% • Claim Settlement Ratio (Amount) – 96.81%
Claim Settlement : The Moment of Truth
“9th International Microinsurance Conference 2013, Jakarta”
Micro Saving Solution – Group Term Life
• Nos of Claims Received - 1,74,197 • Nos of Claims Settled - 1,70,413 • Claims Settlement Ratio (NOP) – 97.83% • Claims Settlement Amount (Sum Assured)
• Rs. 227.56 Crores or US $ 37.92 Mn
Total Nos. Claims Settled under Micro Insurance Initiative – 1,96,949 Total Claims Settled (Amount) – Rs. 396.66 Crores or US $ 66.11 Mn
Overall Claim Settlement Ratio (NOP) – 97.31%
1 USD = INR Rs. 60
Our Cost Effective Strategy
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“9th International Microinsurance Conference 2013, Jakarta”
• Spread the risk • Mutual basis – premium / claim sharing
• Speedy settlement of Claims • A marketing opportunity
• Keep it simple • Lack of data can be a hurdle, so price as per experience • Customized to the needs of the target segment
• Issue Master Policy • Constant Interaction through community workers • Process re-engineering to keep policy issuance cost less
• Less Documentation • Less Premium • Less Operational Cost
More Emphasis on Less
Service Delivery
Products
Claims
Underwriting
Aggregators RO’s/ Branches Bajaj Allianz Life & Aggregators
Microinsurance Business model: Large customer aggregator driven Mass Market Approach
Member & the Aggregator Activity: Example Product development Marketing & sales Purchase of policy
In 2008, research conducted by partner on savings needs of its microcredit customers.
Data collected as part of survey formed basis of product development approach.
Mass awareness campaigns in villages,
Product information disseminated through well organized daily center meetings
Center meets serve as effective customer contact points.
A typical client …lives on less than 2$ a day Lives In rural areas or Slums …generates income from activities
such as agriculture, livestock, trade, production & services
…only members allowed
Bajaj Allianz Life & Aggregator Bajaj Allianz Life & Aggregator Bajaj Allianz Life & Aggregator
Claims … Claims documentation Damage / Risk
… Verification and payments issuance Cheques issued by Bajaj Allianz Payment issued in partner
branches or in center meetings
Limited paperwork requirements Assessment of the claims
received Verify and certify documentation Cancel out exclusions
Death due to natural reasons, illnesses or accidents such as drowning, snake bites which occur in rural areas
Example:
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Easy and simple to understand products Simplified products, minimal documentation for enrollment and claims
settlement, non forfeiture in case of premium non payment, 2 years for
reinstating policy at no interest charges
It’s an essential requirement – Financial Inclusion The segment is vulnerable and exposed to different sorts of risks which can
impact livelihood, Insurance performs the role of a efficient risk protection and
social security tool.
Financial Literacy and Insurance Awareness Cascading key messages on insurance concepts as well as product details
using easy to explain simple tools
Important tool to ensure portfolio quality, as members are aware and well informed
about the key attributes of the scheme
Ensures long term value creation and customer satisfaction.
To Summarize...
“9th International Microinsurance Conference 2013, Jakarta”
Microinsurance is a
Social Business Opportunity…