Page 23 - Life Insurance Today March 2016

insurance. Insurance companies can look at micro insurance faces similar challenges in addition to those of
insurance as either a regulatory obligation or an covariant risk and poor medical infrastructure in rural
investment in loyal customers who will purchase standard areas. With even the remotest areas of the country
insurance products as they become financially secure. witnessing increased penetration of mobile phones and
India - the world's second-most populated country, with the Internet, direct selling through telemarketing and the
an estimated 68.7% living below the poverty line of Internet is slowly gaining momentum, particularly among
US$2.00 per day - is primed to offer micro insurance young, upwardly mobile, urban, middle-class consumers.
products.
This is especially true for simple products like health and
In fact, the IRDA mandates that a portion of new policies term insurance. The IRDA is also making efforts to
are underwritten to rural customers, and regulations maximize this platform's potential with the introduction of
require that insurance be offered annually to a certain Internet awareness campaigns, online games and the use
percentage of defined economic sectors based on the of social media. Insurers are also entering the social media
number of years the insurer has operated in the market. space and getting involved in online customer
New micro insurance sales in FY2012 - 2013 totalled engagement.
around five million lives through individual retail sales at
around US$3.60 per policy, and 13.9 million lives under India is also establishing e-repositories for insurance
group plans at around US$2.60 per life covered. products, which enable customers to hold their insurance
policies in dematerialized (electronic, nonphysical)
Penetration of general insurance in India has come down accounts with IRDA-approved repositories. The e-
to 0.70% in 2014-15 from 0.80% in the previous fiscal repositories will help in safekeeping insurance policies and
despite an increase in per capita premium during the same protecting policyholders against loss of physical copies, and
period. However, the general insurance density - per capita will act as a single contact point for maintaining multiple
premium - went up slightly from Rs 664 to Rs 686 last insurance policies (e.g., changes to policyholder/nominee
fiscal. In fact, the insurance density has increased threefold details). The e-repository is also expected to facilitate
from Rs 235 to Rs 686 over a decade. payment of online premiums, switching funds (for unit-
linked policies), claim filing, etc. E-repositories can
Technological advancement: currently hold life and pension insurance policies, but in
the future will also be able to hold auto, health, home and
Digital innovation has been the catalyst for customer other general insurance products.
revolution, but also offer opportunities to develop greater
customer engagement, insight and experience to meet
customer needs more effectively. Most insurers are still
focused on e-commerce but, the leaders are developing
long lasting relationships by using their digital capabilities
to gain enhanced customer knowledge and harnessing that
information to profile customers more effectively, fine-
tune underwriting and deliver customised solutions.
Market growth is being accelerated by mobile and Internet
penetration that is improving distribution efficiency and
claim management.

For example, handheld devices, Internet kiosks and mobile
vans are insurance distribution tools in rural areas. Even
so, life insurance penetration is still low, faced with
enrolment and claim settlement challenges. Health

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Life Insurance Today March 2016 23