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TRENDS & STRATEGIES IN

AGRICULTURAL SECTOR

SUJITH SASIDHARAN
SRM SCHOOL OF
MANAGEMENT
OBJECTIVES OF THE STUDY:

The primary objective of the study is to


know brief insight into

;What micro insurance is


Evolution of micro insurance in India
Relevance of insurance to the agricultural
sector
.Recommendations and conclusions
WHAT IS MICRO INSURANCE?
Micro insurance is different from
other traditional products in the
market it being a targeted
instrument for inclusive insurance for
low income households.
It intends to offer the poor protection
against risks in return for payment of
affordable premiums in ways that
support small ticket size; Coverage for
the most vital risks; and a responsive
and service oriented distribution
THE STRUCTURE AND ENVIRONMENT OF MICRO
INSURANCE

MICRO LEVEL MACRO LEVEL- THE ENABLING


ENVIRONMENT
MESO LEVEL
MACRO LEVEL MESO LEVEL- FINANCIAL
INFRASTRUCTURE

MICRO LEVEL

POLICY

HOLDERS
MICRO INSURANCE SUPPLY
CHAIN

DELIVE COVE
REINSU INSURER RYCHA POLIC RED
RER NNEL Y
HOLD LIVES

PROVIDE Carries the


Sells the•
Buys the
INSURANCE insurance
TO risk insurance Those
INSURERS •Pays claims product product
who
FOR •Receives • May aid have a
CATASTROP premiums clients with, premium
.HIC RISKS •Manages or settle paid to
regulatory claims cover
compliance •Collects them
premiums
Multi-national
:EXAMPLES and MFIs and• Individuals• Policy
Interpolis, domestic banks •Groups(churc holder
AXA re, commercial •CBOs h Spouses
Swiss re insurers •NGOs members, Children
•Mutual •Specialty trade Group
(member- agents union member
Owned, •Employers members, s with
professionally •Governments employees) policy
run) insurers •Retailers
•CBOs •Churches
•NGOs •Post offices
•Funeral parlors
•Informal groups
MICRO INSURANCE PRODUCTS:
OPPORTUNITIES &BARRIERS

 HEALTH MICRO INSURANCE


 LIFE MICRO INSURANCE
 PROPERTY MICRO INSURANCE
 DELIVERY CHANNELS
 MARKET BARRIERS
 REGULATORY BARRIERS
:TYPES OF MICRO INSURERS
 COMMERCIAL INSURERS
 NGOs

 MUTUALS

 CBOs

WHO IS OFFERING MICRO FINANCE?


 LIC PIONEERS

 ICICI

 BAJAJ ALLIANZ
BAJAJ ALLIANZ LIFE LAUNCHES
MICRO INSURANCE PRODUCTS
Alp Nivesh Yojana – endowment plan:
 Life cover and Maturity benefit equal to sum assured +
vested bonus
 Guaranteed Surrender Value
 Avail additional benefits including Accidental Death Benefit
& Accidental Permanent Total / Partial Disability Benefit

Bima Kavach Yojana – Most economical term insurance


policy
 Return of premium on maturity
 Guaranteed Surrender Value
 Avail additional benefits including Accidental Death Benefit
& Accidental Permanent Total / Partial Disability Benefit

Jana Vikas Yojana - Pay once for a long term security


 Life Cover and Maturity Benefit of 125%of the single
premium payable on survival till the end of the policy term.
 Guaranteed Surrender Value
THE RELEVANCE OF INSURANCE TO
:THE AGRICULTURAL SECTOR

MANAGEMENT

WEATHER SOIL

FACTORS
AFFECTING
CROP
GROWTH &
PESTS YIELD
AGRONOMIC INPUTS
EVOLUTION OF
:MICROINSURANCE IN INDIA
Main Features
 Insurance simplified by the regulator for ease of
distribution;
 No licensing and less stringent training norms (only 25
hours) for micro insurance agents.
 Servicing of micro insurance products open to other
existing intermediaries also;
 Single window policies and service possible as per the
regulations and a non-life insurer can tie- up with a life
insurer and vice-versa to offer composite insurance
product (life and non-life) to the low-income people.
 The IRDA regulation allows the MFIs, NGOs and SHGs
and these have the potential to become the best ‘Rural
Insurance Advisors’ on account of their proximity and
:The comparison
Standard insurance Micro insurance for agriculture
Targeted generally at the urban wealthy or  Targeted at low-income small and marginal 
.middle-class clients farmers, some living along or even below
 High level of awareness. .poverty line
 Markets are near; accessible and familiar.  Low levels of awareness.
 Most companies are aware of their specific  Markets are distant and considered
insurance requirements and bundling not inaccessible due to vast geographical
necessary. stretch and poor infrastructure and
 Ticket size of premium is high. connectivity.
 Globalized.  Not insurance/finance literate.
 Farmers see insurance as an avoidable
 Consumer awareness on insurance as a risk means of additional expense with uncertain
management tool is rising. outcome
 Low ticket size.
 Localized consumers need vernacular
documents
HOW TO MAKE MICROINSURANCE CATER TO THE
NEEDS OF THE FARMERS AND YET BE PROFITABLE
?FOR THE INSURER
 Simplifying underwriting and claim
settlement procedures, introducing
easy to understand and easy to
market and service new integrated
micro insurance products.
 Making premium payment plans
flexible (installment facility)and
simplifying premium collection.
 Designing long-term policies where
necessary, to coincide with the
loaning.
 Micro insurance may prove to be most
effective if it complements micro
finance and the insurance period may
be made to coincide with the loaning
:FARMER’S ISSUES

RURAL CHALLENGES

Challenges of Rural Distribution for Micro insurance for Agriculture

Insurance High cost of Winning trust Existing incentive


Literacy reaching rural areas of farmers structure not lucrative
Enough
RECOMMENDATIONS AND
CONCLUSION
 Simplification of products and bundling where
requires making them easy to understand, easy
to use, sell and service.
 Simplifying and making premium payment plans
flexible to suit farmer needs.
 Focus on volumes by targeting large groups.
 Integrating micro finance activities with micro
insurance for a most beneficial outcome.
 Claim settlement to be timely, simple and
transparent.
 Maximizing the benefit of connectivity revolution
in rural India to reach the unserved markets.
 Using additional innovative distribution channels
to achieve cost-efficiency in agricultural markets.
?QUERIES