Insuring Bharat, the NIC way

A V Girija Kumar, CMD, National Insurance Company

India's ambitious financial inclusion plan requires aggressive expansion by banks and insurance companies in the hinterland. Despite all odds, NIC has opened 596 business centres in various semi-urban and rural locations to grab a bigger pie in the hinterland. It is not stopping at that as the PSU insurer has started forging ties with banks and community service centres to engage banking correspondents and village level entreprenuers to sell insurance products up to a sum insured of `200,000 at the last mile.

In a bid to increase insurance density and coverage with special focus on the rural areas, the Ministry of Finance has embarked on a project of financial inclusion to provide banking and other financial services like life and non-life insurance to the rural population. Initially it was started with expansion of banking network in rural areas. Subsequently the PSU non-life companies were advised to open offices in unrepresented towns up to a population of 10,000 and more (Tier-IV as per census records).

Accordingly, National Insurance Company (NIC) has opened a total number of 596 business centres in various locations of the country. The total number of business centres rose to 994 as on 31st March 2014. Currently the total number such centres stand at 1,015.

For effective control of the business centres which are located in far flung areas, operation of the business centres were restructured under 26 business centre hubs. All the business centres under these hubs operate on the core insurance solution EASI through which policies are issued from business centres and claims are reported through them to the business centre hubs which acts as the claims hub for the business centre. Up to 31st March 2014, the premium collected by these business centres was Rs.3.35 billion, registering a growth of 15 per cent.

It may be noted that the business centres are capable of issuing all types of policies. Further, for the sake of servicing, these business centres are mapped to various business correspondents of banks so that any business proposal from these business correspondents can be handled by the business centre which is available in the area.

For servicing the hinterland via CSCs under financial inclusion plan (FIP), the government has created a separate channel of Common Service Centres (CSCs) who will operate through a Special Purpose Vehicle (SPV) managed by National Informatics Centre. The CSC SPV issues license to a number of common service providers (CSPs). The CSPs in turn will engage village level entrepreneurs (VLEs) or rural authorised persons (RAPs) for marketing the insurance products of various companies. NIC has already signed agreement with the CSC SPV and are in the process of establishing the link up with our server so that the VLEs/RAPs will be able to generate policies at their end. Certain standard products up to a sum insured of Rs.200,000 will be marketed through this channel.

For the purpose of post-sales service of the policies issued through CSC channel, mapping of its offices is under process so that claims servicing will be done by them.

Marketing Micro Insurance Through Banking Channel
Under FIP, the government has also proposed implementation at the sub-service area (SSA) levels, which is grouping each district into 1,000– 5,000 households in a manner that each household has access to banking services within a 5 km radius.

The mission document of Government of India for total financial inclusion has set a target of providing a bank account under Pradhan Mantra Jan Dhan Yojana (PMJDY) to 100 million families who do not have bank accounts. Quite a large number of these accounts are in rural areas. Business correspondents have been appointed by banks to provide banking service to these accounts and they are empowered to open bank accounts, receive deposits and extend advances to the rural population through online connectivity to the bank.

Under FIP, banks will also market life and non-life insurance products especially micro insurance. Since it has been seen that the area covered by these business correspondents is too enormous and far away from the urban centres, our existing network of divisional offices, branch offices and even business centres may not be adequate for providing the necessary service to them.

Keeping that in mind, it has been planned to operate through the online network of the bank. NIC is in the process of signing MoUs with banks, their technical service provider and their business correspondents. Through this arrangement, the business correspondent will be able to upload insurance proposals through the device available with them after confirming the e-KYC norms, generate quotations, collect premiums by debiting the customers’ bank accounts and issue the documents at their end.

NIC has also mapped all micro agents and assigned them business targets up to the block level, which has been uploaded in our website.

Insurance on Wheels
NIC’s fleet of Insurance on Wheels has been expanded to 19. These are being used to develop and promote insurance awareness in non-metro/rural areas. The goal is to provide insurance service to the public at their door step and also address their grievances. The insurance on wheels are also operating on core insurance solution and are attached to the business centre hubs of the regions through the systems.

Promoting Insurance Awareness
For promoting insurance awareness, NIC is participating in all the programmes of state-level banking committees, district-level banking committees and block-level banking committees by display of banners, taking part in training for insurance awareness for the target groups, distribution of product brochures, outreach camps, awareness camps, training camps, etc. Nodal officers have been appointed at every regional office, district and block levels for coordination with their counter parts in the banks.

On 20th August 2014, over 340 camps and 74 mega camps were set up across the country for launching the PMJDY programme. NIC has actively participated in such camps by setting up stalls, distributing product literature and interacting with the target group. l

(The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of INCLUSION. Comments are welcome at

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