BASIX Equity for Equity 1 Micro Insurance- Effective Renewal and Participation Rate Presentation by BASIX, 15-Oct-05

BASIX Equity for Equity 2 Contents Introduction to BASIX Insurance services at BASIX Participation and Renewal in insurance

BASIX Equity for Equity 3 Introduction to BASIX

BASIX Equity for Equity 4 Reach States(8) –Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, Orissa, Jharkhand, Rajasthan No of Villages(10,393) No of customer(Direct+Indirect)-0.25 Mn No of Staff (1,456)

BASIX Equity for Equity 5 1.Deoghar 25. Jamshedpur 26. Ranchi 21.Aska 22.Berhampur 23. Nayagarh 1.Adilabad 2.Adoni 3.Anantapur 4.Bhadrachalm 5.Bhainsa 6.Hindupur 7.Hyderabad ( Urban Micro Finance) 1.Kadapa 2.Khammam 3.Madhira 1.Nalgonda 2.Nandyal 3.Nirmal 4.Nizamabad 5.Proddutur 16. Ramayampet 17. Siddipet 18. Srikakulam 19. Suryapet 20. Vikarabad & KBS Bank (Mahabubnagar) 27.Jabalpur 28. Shajapur & Indore 29.Bhandara 30.Chandrapur 31.Nanded 32.Parbhani 33.Umerkhed 34. Wardha 35.Yavatmal 36.Bellary & KBS Bank (Raichur, Gulbarga) BHARTIYA SAMRUDDHI FINANCE LIMITED STATE WISE UNITS OPERATIONS SNFL Dausa & Daulpur

BASIX Equity for Equity 6 The need for Insurance IMRB study – Impact of micro-credit –Increase in borrower income, asset ownership and social participation in a small way –Customer satisfaction on service and terms high –Credit alone has limited impact on livelihoods –Issues: Unmanaged risk and low productivity and low price realisation Review of strategy: –Add risk mitigation services (insurance, derivatives, no-financial.e.g. vaccination) –Ag/business development services for productivity enhancement, value addition and market linkages

BASIX Equity for Equity 7 Insurance services at BASIX

BASIX Equity for Equity 8 Addressing risks through Risk mitigation services like –preventive vaccination for livestock –integrated pest management (IPM) practices for crops Risk management services –Insurance –Derivatives

BASIX Equity for Equity 9 Insurance-Products PoliciesAvg Sum Insured (Rs) SinceAs on 30-Sep-05 Lives under Group Policy Oct-20021,30,00015,000 Lives under: Retail Policies Dec ,00022,000 Health Insurance Customers May ,00036,500 Livestock InsuredOct ,0008,000 Rainfall Ins customers June-20037,

BASIX Equity for Equity 10 Insurance-Service Performance as on 30-Sep-05 back Claims SettledSettled amount Rs Life30740,00,000 Livestock35727,00,000 Health69,000 Rainfall3054,50,000 Total97571,59,000

BASIX Equity for Equity 11 Insurance Business Model Insurer BASIX Rural Customer Offer products Distribute Insurance Feedback on needs Inputs for products

BASIX Equity for Equity 12 Support for insurance services BASIX has –120 professionally qualified (MBAs and M.Sc- Ag) specified persons to sell insurance –business relationships with 3 insurance companies –online MIS

BASIX Equity for Equity 13 Participation and Renewal in insurance

BASIX Equity for Equity 14 The formula? (Participation, Renewal) = fn(1.customer education 2.incentive to the channel, 3.effective MIS 4.simplicity of product and process 5.channel depth and efficiency, 6.communication, 7.service quality, 8.pricing)

BASIX Equity for Equity Customer Education May not result in an immediate rise in participation But is an important prerequisite to build the long term market This task is some times seen as the responsibility of the NGO sector There is a need for Insurance companies too to invest

BASIX Equity for Equity 16 Educational program on Insurance

BASIX Equity for Equity Incentives to the channel First level: distribution cost to be covered Second level: service cost to be covered Third level: +ve contribution to distribution channel Case of high lapsation in rural life insurance policies in the absence of the above

BASIX Equity for Equity Effective MIS Need for design of MIS specific to channel Insurance co’s MIS is sometimes frozen to past business practices e.g. inability of insurance co to provide information at a disaggregate level Business model should dictate the MIS. MIS capacity should not dictate the business model

BASIX Equity for Equity Simplicity in product and process Convenience in premium remittance Flexible renewal premium payment in Life Insurance Keep fine print and exclusions to the minimum Minimal documentation Simplicity is necessary not only to increase comfort to customer but also to the field advisor

BASIX Equity for Equity Channel depth and efficiency It still has to be sold! Therefore overall performance is still dependent on the ability of the sellers than on the customers Ability to reach the last mile is still the challenge To reach and service the last mile in a cost effective manner needs innovations in business processes.

BASIX Equity for Equity Communication Most promotional literature still happens in English Need for providing product literature, proposal forms and policy contract notes in different vernacular languages

BASIX Equity for Equity Service Early intimation of renewal Assistance in the event of claim Rationalise claim documentation Prompt claim settlement A happy customer provides the best marketing advantage

BASIX Equity for Equity 23 Rainfall insurance claim settlements in Nov-04

BASIX Equity for Equity Pricing Tendency/Advocacy to price rural products below cost-Vicious cycle In a Free/Near Free lunch, service can neither be demanded nor delivered E.g-Crop Insurance

BASIX Equity for Equity 25 Pricing Products priced in a sustainable manner creates a Virtuous Cycle Service will be demanded Creates scope for continuous product and service improvement Role for subsidy: training, capacity building, implementing operational systems and MIS.

BASIX Equity for Equity 26 Thank You