The Indian economy in general has made rapid strides in the recent past. However, a sizeable section of the population, particularly the vulnerable groups, such as weaker sections and low income groups, continue to remain excluded from even the most basic opportunities and services provided by the financial sector including Insurance. In order to address the issues of financial inclusion, the Government of India constituted a “Committee on Financial Inclusion” under the chairmanship of C Rangarajan. The Committee defined Financial Inclusion as “the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.”
Starting with the expansion of banking network in the rural areas, the financial inclusion programmes of the Government of India was subsequently expanded to include insurance facilities. Accordingly, the Public Sector Undertaking (PSU) non-life insurance companies were advised to open offices in unrepresented towns upto Tier-IV level with a population of 10,000 and more.
Working at the forefront, National Insurance Company (NIC) has opened 597 micro offices named “Business Centres”. The total number of Business Centres now stands at 1,014. Equipped to issue all types of policies directly through core insurance, the Business Centres are structured under 26 Regional Business Centre Hubs.
Under the Government of India’s flagship schemes “Sampoorn Vittyea Samaveshan (SVS)” and “Pradhan Mantri Jan Dhan Yojana (PMJDY)”, the Company plans to provide insurance services to remote rural areas through Business Correspondents of banks providing banking services to these areas.
Narendra Modi led government has given impetus to financial inclusive initiatives through the schemes Sampoorn Vittyea Samaveshan or Comprehensive Financial Inclusion and Pradhan Mantri Jan Dhan Yojana. The government claims that more than 125 million bank accounts have been opened under the Jan Dhan scheme. The accounts come with an accidental insurance cover of Rs 100,000 and life insurance cover of Rs 30,000. An overdraft facility of upto Rs 5,000 is also extended to Jan Dhan account holders on satisfactory operation in the account for at least six months.
The push for insurance in the government’s financial inclusion initiatives offer an opportunity to the companies like National Insurance to expand its business among the masses, who had been largely excluded. Insurance penetration in India is amongst the lowest in the world. Only 3.1 per cent of the 1.25 billion Indians have life insurance. In case of non-life insurance the situation is even worse. Just 0.8 per cent of the total population has non-life insurance cover.
With a view to expand the insurance penetration among the masses, National Insurance Company plans to market micro-insurance products through Business Correspondents in the remote rural areas. In fact, to fulfill this requirement, National Insurance has increased its micro-insurance product range from 2 to 11. All these products will be available to the Micro Agents and Business Correspondents of banks at the rural level.
Popular micro-insurance product of National Insurance targeted at rural areas include, Gramin Suswasthya Microinsurance Policy and Gramin Suraksha Bima Policy. Gramin Suswasthya Microinsurance Policy provides cover to lower income class of the society covering hospitalisation expenses of the entire family and personal accident cover to the insured and his/her spouse. This policy has two sections: Section-I covers hospitalisation expenses on family floater basis and Section-II covers personal accident and outdoor patient (OPD) expenses to the insured and spouse due to accident only. Any adult residing in India can take the policy covering himself/herself between the age of 3 months to 60 years.
The Gramin Suraksha Bima Policy provides cover for bodily injury resulting solely and directly from accident caused by outward violent and visible means to the lower income group of the society. This policy has three sections. Section-I covers building and contents, Section-II covers hospitalisation expenses of the family. Section-III provides personal accident cover to the insured and his/her spouse.
Besides, the company offers a number of health, motor, personal, industrial risk and commercial risk insurance products for both urban and rural customers.
For facilitating online availability, National Insurance is in an advanced stage of integration with IT network of one of the country’s premier nationalised banks.
Pradhan Mantri Suraksha Bima Yojana
Another new non-life insurance product recently introduced by the government is Pradhan Mantri Suraksha Bima Yojana (PMSBY). Finance Minister Arun Jaitley announced the new product in the Union Budget 2015-16 with a view to increase insurance penetration in the country. It is a low-cost insurance scheme that offers an accidental death and full disability cover of Rs 200,000 and partial disability cover of Rs 100,000 for a premium of just Rs 12 per annum. The scheme is available for the people in the age group of 18 to 70 years.
The scheme will be offered by all the government-run general insurance companies in collaboration with banks. National Insurance has actively taken up the scheme. The Company has already signed Memorandum of Understanding (MoU) with a nationalised bank to offer services under the scheme to the account holders of that Bank.
Incorporated in 1906, National Insurance is the oldest insurance firm in India and it is the only government-run non-life insurance company headquartered in the Eastern part of the country. It is the market leader in Northern and Eastern zone and recognised as “Best in Service” in Motor and Health insurance segments. These two segments account for 63 per cent of India’s non-life insurance market. NIC has strategic alliance with India’s leading automobile companies like Maruti Suzuki, Tata Motors, Nissan and Honda Siel. In two wheeler segment it has tied up with Hero MotoCorp.
For the ease of marketing products through the Common Service Centre channel, National Insurance has signed an agreement with Common Service Centre – Special Purpose Vehicle (CSC-SPV).
Insurance on Wheels
Apart from the aforementioned schemes, National Insurance’s unique Insurance on Wheels (IOW) vehicles have been serving well – both, as a single person mobile office providing almost doorstep service delivery on the one hand and a publicity vehicle creating insurance awareness and encouraging interest in insurance, on the other. Currently, 10 IOWs ply in different States of the country actively providing insurance cover to the citizens located in remote and unrepresented geographies. The Company plans to commission nine more IOWs facilities soon.
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