For any insurance company, penetrating in the rural areas is not easy. For one the worth of “to be insured asset” is generally very low and secondly, collecting the premium is quite difficult. But Iffco-Tokio, the non-life insurance company has achieved this impossible feat with the help of cooperatives and has grown at a breath-taking pace in the last ten years.
Talking to Indian Cooperative.com, the Managing Director of Iffco Tokio Mr S Narayanan said that leakage is most common in micro insurances as it is very difficult to find out the fraud. But with the help of cooperative societies we can keep a tab. According to IRDA, Cooperative societies may not be our Agents but its members can be, said Mr Narayanan.
Banking on the huge network of IFFCO which has 40 thousand societies as its members, Iffco-Tokio has launched a series of insurance plans which address the poorest of the poor.
The farmers’ suicide would be stuff of past if the insurance company penetrates deep in rural areas. We have begun a process and given the huge size of our country it may take a while but Iffco-Tokio can help check farmers’ suicide and make free our farmers from the clutches of money lenders, claimed the Managing Director Mr S Narayanan.
Its Sankat Haran Bima Yojna provides personal accident insurance cover attached to the purchase of fertilizers from Iffco. It gives a coverage of Rs 4000 on each sac to the maximum of one lakh or on 25 sacs . To keep the procedure simple, the sales receipt itself acts as the policy document and can be produced for settlement of claims.
In Barish bima yojna an average graph of the last years’ rail fall of the area is acquired from IMD sources. In case of variation to the tune of 25-30 per cent in the rain fall, the company gives claim to farmers.
Iffco-Tokio has another interesting bima plan in the shape of Kisan Subidha Policy in which house hold articles are insured against fire or flood. Cattle insurance is another major area where leakage was quite common and now the company has come out with the latest technology of Radio Frequency Tagging.
The question of local acceptability is most difficult to settle in rural areas, argues Mr Narayanan, the Managing Director of Iffco-Tokio. With the help of IFFCO’s network this problem was solved for us. Local language another handicap for companies operating in urban milieu was also solved by the agents of cooperative societies in rural areas. We could also thwart any manipulation as our alert agent from cooperative societies were there to warn us, added Mr Narayanan.
The Indian regulator(IRDA) says a minimum of 7 per cent of business is to be done in rural areas. But majority of companies pay penalty than operate in rural areas. Iffco –Tokio has expanded its business to the tune of 12 percent in rural areas, thanks to cooperative societies, says Narayanan.
In 2001 it collected a premium of Rs 72 crores and the same became Rs 1750 crores in the year 2011.
There are about 21 players in non-life insurance in India and among private players, Iffco-Tokio ranks third. Mr S Narayanan says that more than acquiring number one position in business we want to be number one in people perception. Reliability and dependability in the mind of people are more important for us than anything, adds Narayanan.
Today there is no insurance company except Iffco-Tokio that has been able to avoid a single year of loss or negative growth. Market for non-life insurance is huge and Iffco-Tokio posted a growth of 21 per cent last year. The MD plans to take it to the heart of people and he is banking on cooperatives and good will of Iffco to help him achieve this goal.