Bajaj Allianz Micro Insurance Initiative - India Case Study - 9th International Micro Insurance Conference 2013
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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
India: Economic Snapshot
This means that
Only 5% of the
Close to 800 million Our company operates in a
Indian population
is covered with some
People in Rural India country where 32.7% of the
sort of insurance cover
have no insurance population fall below
access the international poverty
line of US$ 1.25 per day while
There is an urgent need 68.7% live on less than US$ 2
In India, Social Security to provide insurance per day.
Is virtually non existent protection
to these individuals
Opportunity: Lower middle income group
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.
Emerging Trend: Opportunity at the
Source: UNDP, World Bank 2010 Report ' forgotten’ Middle of the Pyramid
“9th International Microinsurance Conference 2013, Jakarta” 2
Challenges : Product Design - Rural Market
Customer Profile
• Simple to understand as the
target audience is largely
financially illiterate
• Low awareness
Documentation Income Patterns
• Limited availability of • Erratic and seasonal income
documents to determine hence lapsation trends can
health, age & primary be higher than normal
education levels.
Small Ticket Sizes
• Efficient mechanisms for
collecting premiums as little
as US$ 1 per month against
yearly premium
“9th International Microinsurance Conference 2013, Jakarta”
Product Development Dashboard – An Innovative Micro Savings
Product
How would one define a good savings plan?? How do we measure against these parameters??
Affordable
Available in small premium sizes Rs 45 (Less than $ 1 per month)
Affordable
Wide Coverage across ages
Wide Coverage Individuals between the age of 0-65 male and female can be
across ages covered.
Flexible
Low Surrender Penalty
Premium withdrawal at any point during the policy tenure
Flexible Non-forfeiture of premiums and continuation of policy
Safety of Investment and competitive yield
Both regular and single premium payment options available
Capital Guarantee on the net investment premium
Minimal documentation for enrollment 0% Equity
and claimsexposure across the fund
Safety of Investment and Competitive Yield Returns declared on the existing fund.
of 8.3% - 8.8% in last 5 years
“9th International Microinsurance Conference 2013, Jakarta”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”Sarve Shakti Suraksha - Simplistic & Customer Centric
Key Product Features “Over the Counter (OTC) Solution”
SSS (Sarve Shakti Suraksha ) – Over the
Counter Solution( OTC) Non Forfeiture of Premiums
Risk coverage with savings options
Minimum Sum Assured per annum: Rs
Low Surrender Penalty
2500
Minimum product term: 5 years
Eligibility- Between 0-65 years Easy Revival without Penalty
Low Premium: Rs 45 (Less than $1per
month)
Minimal documentation at the time of Loan Against Policy
product enrollment & Claims.
Rider Available – ADB & ADDB Non Medical Underwriting
Incase of Death of the member- Sum Assured
plus the account value of the customers
Easy Enrollment by just filling One Pager
investment
form with on the spot “Welcome Letter”
On Maturity Value - The account value subject
to the minimum maturity guarantee,
“Standard Premium Across all Ages”
“9th International Microinsurance Conference 2013, Jakarta” 6Yet Another “Hit” in Micro Insurance & Financial Inclusion
Group Term Life Product
Product name (generic or • Group Term Life
marketing name)
Product type (e.g. credit life, • Pure Risk Insurance coverage for a period of one year
endowment, motorcycle)
Country • India
Distribution partner type (e.g. • Non -bank Microfinance Institutions (MFIs) & Common Service Centers
MFIs, banks, coops, retailers)
1 -sentence product description • An insurance product designed to provide risk protection against natural
natural
death
death
to the end customer
• Other benefits include an accidental death & disability rider
Group or individual product • Group Insurance
Covered risks & benefits / sum • Sum Insured: Minimum INR 1000, no limit on maximum coverage
insured • Risks covered: Natural and accidental death
• Disability rider is optional (but rarely implemented in microfinance
microfin ancecontext
context)
• MFIs deduct the outstanding loan balance (if any) from the sum iinsurednsured
Premium range (min, max) • Depending on the group, underwriting rate is set by the company’s
company underwriter
’s underwriter
• Varies based on group demographics
Nos of Lives Covered – More than 30 Million in last 5 years
“9th International Microinsurance Conference 2013, Jakarta”Product Distribution Approach – Rural Market
Collaborate with strategic partners
• Associate with partners operating across
these segments
• Have sound knowledge, understanding and
access to captive customer databases
• Proper Infrastructure
Have a service orientation Promote insurance awareness
• Willing to get associated with service • Promote financial literacy and insurance
support and policy administration/servcing awareness through specially designed
• Support the insurer in intimation and tools
resolution of claims and other
requirements
Existing distributors of products/services
• Have a firmly established operation across
specified core businesses
• Insurance cant be the sole business activity
• Help in buildling Low cost of distribution
“9th International Microinsurance Conference 2013, Jakarta”Distribution – Our Rural Business Model
70 Micro Finance Institutions
Micro
More than 600 Co-op Scocities Finance
Credit/ Institutions 200 Rural Banks
Non Credit
Co-operative Rural Banks
Societies
Exploring Coffee/Tea/Sugar
Board etc
National
Boards & Rural
E-governance
Associations Business Plan
7 NeGP Players with 60,000 CSCs
NGOs, Organisation with Rural Business
Presence such a “Rural Retail” Others
Correspondents
Dairy
Federation 10 Key BC Players with target
reach to 20 million people
We have piloted with 4 key Dairy
Boards in Indian
“9th International Microinsurance Conference 2013, Jakarta”Rural & Micro Insurance Achievements (As on Sept’13)
No of Lives Covered
SSS GTL Total
40.00 36.16
35.00
Lives Covered (in Millions)
29.14
30.00
25.00
17.81
20.00 15.61
15.00 8.51
7.90
10.00 5.08 7.02
1.69 1.37 4.27
5.00 1.70 1.70 1.37 0.31 1.04
0.33 2.21 0.61
0.00 0.81
0.00
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total
Year
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
“9th International Microinsurance Conference 2013, Jakarta”Rural & Micro Insurance Achievements (As on Sept’13)
Micro Insurance New Business
SSS GTL Total
200
163.24
Premium ( in USD Million)
32.61
150 130.63
100
34.72 34.98 43.60
50 23.07 25.75
16 16.10 0.26 21.68 1.39 20.34 5.41 27.57 16.03 9.51 19.75
0.01 10.24
0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total
Year
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
Figures are on Financial Yea Wise i.e. 1st April – 31stMarch
1 USD = INR Rs. 60
Figures as on September’13
“9th International Microinsurance Conference 2013, Jakarta”Claim Settlement : The Moment of Truth
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%
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 1 USD = INR Rs. 60
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%
“9th International Microinsurance Conference 2013, Jakarta”
12Claim Settlement : The Moment of Truth
Claim Story…Our Cost Effective Strategy
• Less Documentation
More Emphasis on Less • Less Premium
• Less Operational Cost
• Issue Master Policy
Service Delivery • Constant Interaction through community workers
• Process re-engineering to keep policy issuance cost less
• Keep it simple
Products • Lack of data can be a hurdle, so price as per experience
• Customized to the needs of the target segment
• Speedy settlement of Claims
Claims • A marketing opportunity
• Spread the risk
Underwriting • Mutual basis – premium / claim sharing
14
“9th International Microinsurance Conference 2013, Jakarta”Microinsurance Business model:
Large customer aggregator driven Mass Market Approach
Activity: Bajaj Allianz Life & Aggregators Aggregators RO’s/ Branches Member & the Aggregator
Example:
Example Product development Marketing & sales Purchase of policy
In 2008, research conducted by Mass awareness campaigns in A typical client
partner on savings needs of its villages, …lives on less than 2$ a day
microcredit customers. Product information Lives In rural areas or Slums
Data collected as part of survey disseminated through well …generates income from activities
formed basis of product organized daily center meetings such as agriculture, livestock, trade,
development approach. Center meets serve as effective production & services
customer contact points. …only members allowed
Bajaj Allianz Life & Aggregator Bajaj Allianz Life & Aggregator Bajaj Allianz Life & Aggregator
Claims … Claims documentation Damage / Risk
… Verification and Limited paperwork requirements Death due to natural reasons,
payments issuance Assessment of the claims illnesses or accidents such as
Cheques issued by Bajaj Allianz received drowning, snake bites which occur
Payment issued in partner Verify and certify documentation in rural areas
branches or in center meetings Cancel out exclusionsSpecial Initiatives in Micro Insurance “9th International Microinsurance Conference 2013, Jakarta”
To Summarize...
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.
Microinsurance
Easy and simple to understand products
Simplified products, minimal documentation for enrollment and claims is a
settlement, non forfeiture in case of premium non payment, 2 years for
reinstating policy at no interest charges
Social Business
Opportunity…
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.
17
“9th International Microinsurance Conference 2013, Jakarta”Thank You For Your Attention!!!
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