inclusive insurance in india a case study · irda re-entry of private players rural and social...

Inclusive Insurance in India – A Case Study

Arman Oza

National Insurance VimoSEWA Cooperative ltd. India

Inclusive Insurance 2014

International Forum

April 16-17, 2014

Ulaanbaatar Mongolia

Indian Insurance Industry - Timeline

2

India’s first

Life Insurer

registered

India’s first

General

Insurer

registered

Insurance Act

– the first

intensive

insurance law

enacted.

Life

Insurance

nationalised

General

Insurance

nationalised

Microinsura

nce

Regulations

enacted

Birth of

IRDA

Re-entry of

private

players

Rural and

Social

Sector

Obligations

1818 1850 1938 1956 1973 2000-01 2005

1 6 1

23 21

Life Non-life Reinsurance

Public Sector Private Sector

Fig. 2: No. of Insurers

34,8

5,8

13,1

4,7

0

10

20

30

40

50

60

Life Non-life

Public Sector Private Sector

Fig. 3: Gross Premium 2012-13 (USD Billion)

Brazil

Germany

South Africa

Unites States

China

South Korea

Thailand

India

0

2

4

6

8

10

12

14

16

Fig. 1: Insurance Penetration & Density

-10

0

10

20

30

40

50

2202-03 2005-06 2008-09 2011-12

Life Non-life

Fig. 4: Premium Growth (%)

Indian Insurance Industry – A Snapshot

Source: Annual Report 2012-13, IRDA 3

The Changing Face of Microinsurance

4

Individ

ual

Instt./Govt. co-

contribution

Partially

Subsidised

Fully Govt.

Subsidised

Individual

Semi-

formal

Instt.

Insurer

Govt.

CBO

Community

R

I

S

K

C

A

R

R

I

E

R

RSIK

FINANCIER

Informal

Insurance

Social Security

Fig. 5: Coventional Structure

Microinsurance

Individ

ual

Instt./Govt.

co-

contribution

Partially

Subsidised

Fully Govt.

Subsidised

Individual

Semi-

formal

Instt.

Insurer

Govt.

CBO

Community

R

I

S

K

C

A

R

R

I

E

R

RISK

FINANCIER

Informal Insurance

Social

Security

Fig. 6: The New Paradigm

Microinsurance Social

Micro

insurance

Current Status of Microinsurance in India

5

• Total Coverage – 422.11 mn • Social MI coverage 311 mn • 31% growth in coverage • 49% growth in premium • 69.6% - India’s share in Asian growth

Rural & Social Sector Obligation

Microinsurance Products

Mutuals

Social Microinsurance

How is Microinsurance Delivered?

6

Subsidized Model

Voluntary Model

Compulsory Model

Governments

Insurers Insurers Mutuals/ Insurers

Mutuals / CBOs / NGOs

MFIs/ Banks

Absent

State Exchequer

Insured Members

Insured Members

MFIs / Banks

Mutuals / CBOs / NGOs

Driver

Risk Carrier

Distributor

Financier

What Has Been The Expereince?

7

Parameter Subsidized

Model

Compulsory

Model

Voluntary

Model

Scale High High Low

Client Value Low Low High

Sustainability

Potential

High High Low

Renewal Rates Low Low High

Utilization Erratic Stable Stable

Vulnerability to

Adverse Selection

Low Low High

The Challenge

8

Client Value & Utilization

Scale and Sustainability

Manufacturers

Distributors

The Current Scenario

9

Looking Ahead

10

Manufacturers

Distributors

11

THANK YOU