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View more presentations from Keshav Kumar.

The Alchemist

Now you can find top-ups of Insurance policies!

“Small is Big” is an old formula which has transformed FMCG industry, telecom sector and now it’s the turn of the insurance business. Now be ready to find insurance policies selling at your neighborhood kirana store and paanwallah shops. Looking at the huge opportunity in rural sector, insurance companies are looking for innovative marketing strategies in order to establish themselves in these markets. Recently, I heard the news of Max New York Life Insurance Company launching Max Vijay, a new product in rural areas. This product would be packed in a DVD-like pack and sold through the grocery stores. This sounds as an interesting move to me because of the comprehensive distribution strategy. The enrollment price could be minimum Rs. 1,000 and maximum Rs. 25,000 depending on the plan opted for.

I feel Max Vijay has been developed looking at the mobiles phones’ successful distribution strategy in these markets. The identity proof and other relevant documents from the buyer will be collected by the store owner who sells the policy. As Analjit Singh says, “It is like a mobile recharge – one goes to a store and buys a prepaid card.” In my view it will more suitable for people like construction workers and daily wage earners who might not have regular income to pay the subsequent premium.

Apart form life insurance sector in India, I believe there are many other markets which will be tapped in the next phase of the ongoing revolution. Two wheelers’s insurance industry, for example, has a lot of opportunity for insurers. Around 70-80% of two wheelers are not insured after they are 1 to 2 years old. Most of the two-wheeler owners find it very inconvenient to present their vehicle at the time of filing in the details and as a result, with seven million two wheelers sold every year, it is a huge market still waiting to be tapped. I hope the strategy adopted by Max Life Insurance will inspire the general insurance companies as well and they come up with similar innovative ideas to tap the other markets.

Email id: keshavkd@gmail.com

Get Insured Even After 65 Years!

Al the senior citizens now need not worry about their health problems as they can get insured even after 65 years. IRDA has asked the insurance companies to make health cover affordable to all senior citizens in the country. It is certainly an encouraging step been taken by IRDA which will give some relief to those who could not get themselves insured at an early age. However, before introducing such a health insurance system, all the implications which might come in the way should be thoroughly studied.

I believe that one of the most common complaints registered by ageing people is about insurance companies denying renewals. Therefore, if this new system is introduced, people should be given guaranteed renewal of their insurance without any upper age limit. However industry experts say that people should embrace health insurance at an early age so that insurers could distribute their risk better. I also feel there is no free lunch in today’s world and therefore government should take responsibility to provide health security to the senior citizens.

In my view, this programme can be begun with those who are working in the organized sector from the day they take up employment and then it can embrace those working in unorganized sector as well. India is a country where a lot can be achieved in health insurance sector if the companies come up with even a competitive premium scheme. But I think the programme needs to be designed in such a way that the employee will not have to pay premium after retirement. All the money should be collected when the person is in his or her employment. IRDA should also take care of the profitability part of insurers.

We can certainly expect a lot of health insurance products selling in the country as soon as FDI norms for this industry are relaxed. Currently Foreign Direct Investment (FDI) in this sector is 26% which is likely to be increased to 49%. If it happens, it is expected that a minimum capital of Rs. 50 crore can come in form new entrants who in my opinion will benefits the consumers to a large extent. They can get better pricing and better deal when competition intensifies among all the existing and new players in the market.

Wait, Rural People are using Mobile Banking!

Having one bank account for every household is the aim of Indian government. With the arrival of mobile banking which is catching up very fast in the metros and other cities, it can be achieved soon. Recently, I read an article which commented on the scope of mobile banking in rural India. The article said that people form rural India can perform banking transactions using mobile phone which made me think over the road-ahead of this development.

A mobile phone acts as a branch of the bank which also stores the database of customers. The name, address, photo, and other relevant details held by issuing bank are stored in the smartcard of phone. Customers get a secure electronic identity using which they can perform banking transactions wherever they want to. Mobile banking also helps banks and government in saving crores of rupees by way of reduced transaction costs. As per a data analysis, it reduces the transaction cost by 70-80%.

Around 66 percent of rural India is still unbanked and I believe one of the strong reasons of this huge gap is lack of formal financial services in rural areas. People in these areas do not have access to banks and as a result government looses a huge sum of money in form of taxes and other transaction costs. Looking this huge opportunity, RBI has asked banks to launch mobile-banking services in the under-banked regions. In some of the states, these services have got huge response. In Andhra Pradesh alone, for instance, more than 2.5 lacs people have registered for mobile banking services.

Other than banks, many microfinance institutions and financial institutions are coming up with their innovative offers to attract the rural customers. SKS Microfinance and Ujivan are among the leading MFIs which are in talk with different banks to provide mobile banking services in rural areas. Many mobile services providers have also shown interest in these developments which may bring sea change in banking services in rural India. However, in my view, before introducing these services, all the institutions must work together in order to provide maximum benefits to the customers.