2. Rural Micro insurance Retailing Strategy IIRM Hyderabad October 14 th Vijay Athreye

3. Global Micro insurance Conference Munich 10/20052 TATA-AIG Insurance Distribution in Rural Areas  Multi channel approach  Agency operations in Rural areas – Regular Insurance Products  Alternate channels operations in Rural areas – Regular Insurance Products  Corporate agents viz Financial Intermediaries  Insurance Brokers.  Rural Banks  Rural and Social channels –  Micro insurance and Rural Insurance products.  Regulation notwithstanding TATA-AIG Life views Rural and Micro insurance as an integral part of its business development activity in India

4. Global Micro insurance Conference Munich 10/20053 Foray into MI --OBJECTIVES  Regulator  YOY Growth and Industry Leadership  Sustainability  3C Approach  Replicable and Scalable  Developmental  2/3 rd of Human Race.  PR Value  New and Innovative

5. Global Micro insurance Conference Munich 10/20054 Our Strategy Relevant and Affordable products Outsourced Distribution Management Move up from the bottom of the pyramid Low Cost Front end Processes Investment in Grassroots Advisor Training Committed Top Mgt And Staff Socially responsible business Supplementary Livelihoods

6. Global Micro insurance Conference Munich 10/20055 Pyramid –How Long ? Urban 26 % Households 1998 – 99 2006 – 07 25 22 26 24 3 11 12 23 35 18 3 4 10 36 47 6 6 18 46 24 Rural 74 % Households 1998 – 99 2006 – 07 L LM M UM H Source : NCAER

7. Global Micro insurance Conference Munich 10/20056 Can Community Service Providers be formed here ? Most Rural Service Providers belong here Poor Uptake of Services by Lower Lower Middle Rural Services

8. Global Micro insurance Conference Munich 10/20057 The Product /Market Segmentation Social Products Market ANP < Rs 1000 Rural Market 1000<ANP < 5000 Brokerage /Corporate Agency Market 5K<ANP< 20K Agency Market ANP> 5K P PS PSS I Banc Assurance ANP> 10K R and S RP

9. Global Micro insurance Conference Munich 10/20058 Social ( Micro insurance ) Product Details (Read Rs 1000= US $ 22) Kalyan Yojana ( Five year renewable protection plan Age Sum AssuredAnn.Prem.. 20Rs 15,000.00Rs.72.00 30Rs 15,000.00Rs 84.00 40Rs 15,000.00Rs 132.00 50Rs 10,000.00Rs 180.00 55Rs 10,000.00Rs 276.00 Jana Suraksha Yojana ( 15 year protection plan with maturity benefits -- Premium Rs 180 per qtr. Karuna Yojana (( 15 year protection plan with maturity benefits -- Premium Rs 75 per qtr.

10. Global Micro insurance Conference Munich 10/20059 Micro agent Model for MI retailing  Not limited to MFI’s.  Revenue for the NGO Partner.  Supp. Livelihood based  Developmental impact – livelihoods.  Target market Development– awareness,choice etc.  Based on geo. Jurisdiction – bigger inclusive market.  Service infrastructure leveraging possibilities.  More compliant implementation and control for Company.  Social—Rural Bottom up Approach. Company can plan on long term business strategy

11. Global Micro insurance Conference Munich 10/200510 Public Private Partnership with DFID Low Income Rural Community Rural Community Insurance Groups Leader +Members RO NGO Mentoring Awareness TATA-AIG SHG’s PersonnelInfrastructureTrainingCollateralProduct FDCF Mid / Higher Income Rural Market

12. Global Micro insurance Conference Munich 10/200511 MicroInsurance --Summary of Benefits  Untapped potential. Market.  Poling of RISK and Law of LARGE Numbers.  Portfolio of profits -- Some yield more some less.  Experience –Scalable and Replicable.  Demonstration and Rub off effect.  Developmental  Arrest of Poverty perpetuation.  Rural Livelihoods.  Services Infrastructure.  Choices for the poor.

13. Global Micro insurance Conference Munich 10/200512 Results MI vs. Rural and Company Numbers and Premium - Micro insurance/Rural DetailsDec 01-- Nov 02Dec 02 -- Nov 03 Dec 03 -- Nov 04 Dec 04-Jun 05 Jun 05-Nov 05 Dec 05 -- Nov 06 FYP ( Rs ) 000s60058014582374312612500 Numbers7380323210073133881742764000 Total RuralNA 340003393437100135000 Micro insurance percent in Rural NA 30394548 Microinsrance percent of Company numbers NA 59.19.312

14. Global Micro insurance Conference Munich 10/200513 Results Regulatory Mandate versus Actual Mandate/Achieve ment ParameterYear 1Year 2Year 3Year4Apr 05 to Mar 06Yr 6 onwards YTD Jun Proj. Rural RequirementPercent of New Policies 5%9%12%14%16% 18% AchievementPercent of New Policies 10.60%10.30%14.30%17.85%25.50%21%23% Social RequirementNo. of New Social Sector lives 5000750010000150002000025000 AchievementNo. of New Social Sector lives 90009344107581611710000040000Will be met

15. Global Micro insurance Conference Munich 10/200514 Challenges  Sustainability and Persistency  Products  Relevant,affordable and Profitable.  Personnel  New Breed --- Committed,suitable.  Organization  Vision and Long term Commitment  Adaptability of Processes  Regulator  Policy framework.  Economy  Cascading growth

16. Global Micro insurance Conference Munich 10/200515 With a little Help !!  Regulations on MI.  Type of agents.  Agent Licensing procedures.  Long tenure products (10-15 years )  Composite products /agents, bundling of riders etc.  Levellized commission structure.  Concept of a servicing agent.  TDS on small earnings.

17. There is fortune at the bottom of the pyramid. The key question -- how businesses can become more inclusive to reach this segment ? When rural development becomes a key business concern we should have a win- win situation !! Vijay Athreye AVP and National Head Rural and Social TATA-AIG Life Ins. Co. Ltd.