Page 156 - India Insurance Report 2023- BIMTECH

144 India Insurance Report - Series II

3C Model & Technology – The Future

of Rural Insurance

- Prof. Manoj K Pandey
16 Associate Professor, BIMTECH

1. Introduction

Rural India, often mistakenly referred to as ‘Bharat’ (“It is India that is Bharat”), remains at the core
of Indian society. While it’s a fact that agriculture and related industries, which are the primary pursuits
in rural areas, account for approximately 20% of the GDP, nearly 65% of the country’s population
resides in rural areas. The entire country’s progress depends on true synergies and linkages created with
rural India, which is heavily reliant on agriculture and related endeavours, making it vulnerable to
climate changes and weather-related risks. Insurance is an invaluable instrument capable of mitigating
losses and sustaining the rural economy.

The Indian government, the Regulatory Authority (IRDAI) and the Indian insurance industry have
endeavoured, over time, to see rural insurance coverage improve. These measures included introducing
micro-insurance concepts, improving associated regulations, increasing the number of intermediaries, and
statutorily and regulatorily asking insurers to fulfil a certain minimum “rural business quotas”. Until 2014,
these attempts, however, related to dealing with and tightening supply-side mechanisms. The government
has now shifted its attention to addressing the demand-side mechanisms as well, which is gradually transforming
the scenario, aided by appropriate schemes, subsidised where necessary, and buttressed by technology.

2. The Government Push and Use of Technology

The rural areas in India inhabit over 90 crore individuals, but only 8% to 10% of the rural populace
possesses life insurance. Similarly, in general insurance, more than 70% of the tractors used in rural areas
lack insurance coverage, and not even 1% of the cattle is insured. With the government pushing for PM
Fasal Bima Yojana (PMFBY) and the Ayushman Bharat Universal Health Scheme, insurance coverage
has begun to improve substantially. Some recent changes and developments that have contributed to
increased insurance coverage in rural areas include:

2.1. Online Connectivity

The advent of online connectivity and the widespread adoption of smartphones has significantly
transformed our digital landscape. Insurance companies now have the convenience of directly engaging