Rural India offers tremendous growth opportunities for insurance companies, says assocham
Insurance companies can add about Rs. 1000 crore to their networth from nearly 200 million rural folk that are looking for alternate savings channels for their surpluses provided these come out with innovative schemes at affordable premium, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Assocham paper on `Rural India and Its New Investors’ adds that insurance companies can lure this investors lot even for agri, housing, personal, education and auto loans after these have insured them under its new schemes.
Currently, only 8-10% rural households are covered under life insurance schemes and remaining 90% can be targeted for new innovative insurance schemes.
According to ASSOCHAM, rural India’s income has risen due to shifting of its occupation from agriculture to non-farm agricultural income and it has become an important facet of rural India. This income mainly comes from dairy, food processing and packaging, commodity trading and infrastructure development income. The non-agriculture base of rural occupation and income have been growing in rural GDP figures that are estimated at 45%.
ASSOCHAM has therefore felt that this is the opportune time for the public and private insurance companies to enter into rural India in a big way by introducing easy premium schemes in life insurance and for agri insurance, auto insurance etc.
To reach the rural investors, the ASSOCHAM has suggested that the insurance companies should interact with local government/development agencies, as well as Panchayats and identify various products for the preparation of the Service Area Credit Plans in the rural areas.
The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels; build consumer awareness and confidence. Nearly 20% of all farmers in rural India own a Kissan Credit cards. The 25-30 million credit cards offer a huge data base and opportunity for insurance companies. An extensive rural agent network for sale of insurance products could be established. The agent can play a major role in creating awareness, motivating purchase and rendering insurance services.
Being an agrarian economy again there are immense opportunities for the insurance companies to provide the liability and risks associated in this sector. The Assocham Paper found that the rural markets are still virgin territories to a great extent and offer exciting opportunities for insurance companies. The surest path to success is to judge and measure the requirements of the people correctly and offer a scheme that they would be able to afford.
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