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4 steps to ensure more Indians buy insurance policies

On this insurance awareness day, the time has come to focus on the untapped, under-served semi-urban and rural markets of the country

June 28, 2021 / 09:31 IST
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Insurance coverage has been concentrated predominantly in urban India. There is a huge untapped insurance market in rural areas. There lies a humongous protection gap in semi-urban and rural India, even for essential covers such as health, motor and home insurance. Urban India, too, has a wide protection gap, but it is getting bridged rapidly with greater awareness and wide distribution. It's time to look across the vast expanse of the country towards untapped and uninsured markets.

On this insurance awareness day, the time has come to focus on the untapped, under-served markets in the country, i.e., the semi-urban or rural areas, or Bharat as we call it. This market offers unprecedented opportunities, and as the urban area is gradually getting saturated, insurers have to foray into the unexplored territories. As rural India is witnessing a substantial rise in purchasing power, we can see a shift in the business strategies of organisations that are now giving equal if not more attention to the heartland of the country.

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Bank on business correspondents for better reach

We need to understand what business models will work in these markets. One model which has huge potential is the banking correspondent mode. Financial inclusion has been the core of various government initiatives. To propel efforts in this direction, RBI has launched a business correspondent model. Now, one person will reach out right up to the village level, acting as a one-stop-shop for all financial needs. I think this is an excellent model to distribute general insurance. As per Nielsen's report, rural markets had 11 times higher growth in packaged staple consumptions than metros.  The same report states that some two-thirds of the rural consumers are looking for products that can make their life easier or improve it. This is the reason why banking correspondents are reaching out to them for savings and investment management. Insurance, too, can be proposed here to safeguard the assets built over the years.