With a network of 2048 fully computerized branch offices, LIC is taking the continuous effort to spread the awareness of life insurance into the rural masses especially in the backward and remote areas and this endeavor has resulted in a steady all-round growth in the life insurance industry.
After the notable failure of non-banking financial institutions, the LIC and Post office savings are getting prominence among the rural population. LICs go to the market structure has inherent flexibility and the brand has a worthwhile effort to achieve adequate rural penetration.
Despite the LICs tremendous effort to cover the rural population, the segment has an enormous potential yet to be covered. The entry of private and foreign life insurers into the market kick-started the vigorous competitive endeavor to tap the rural life business. The private players are conscious of the available potential and are showing consistent and constant interest in taping the rural market.
The entry of private life insurers has changed the basic structure of the life insurance market in India from the monarchy market to a competitive ground. HDFC Standard Life and ICICI Prudential have been taking an active and special interest in rural India to spread their business followed by Allianz Bajaj, Met life and Aviva life insurance companies. ICICI prudential entered the rural market with a basket of policies specially designed for the rural segments.
The main strategy of private players to participate in the rural market is to offer small life covers with a low premium and this strategy will give a rich dividend to them by scoring the active participation of the rural mass.
An advanced step is being taken by Aviva’s life by opening the rural branches. Nevertheless, these rural branches specially cater to the need of the rural populace only and customize their products. Amar Suraksha, Jan Suraksha are the products offered by it with low premiums.
The astounding statistic is that life insurance in rural India is expanding almost five times faster than the urban demand. Efficient distribution channels and suitable products are the needs to cater to rural demand.
Undoubtedly, private insurers are making a good attempt to tap the potential market. Since they are profit cantered they have to minimize their cost and they prefer to go to market model structure for products.
The insurers ought to understand that marketing in the rural sector is different from the urban sector. The agents must be trained accordingly to educate rural Indians regarding the concept of insurance and make them aware of various kinds of policies and their implications.
In this regard, the segmental marketing concept may be adopted in which the marketer analysis the concerned segment regarding its nature of the population, their social belief, educational background, their awareness of their products, suitable products to fit the potential consumers, strategies of marketing and so on.
Thorough segmental marketing analysis will make life insurers to develop the right product for them through their effective channels of distribution.
The role of the agent alone does not suffice to popularize life insurance products in the rural sector. So the companies have to select the right distributors, who could serve as a trusted business associate for insurance companies and good financial advisors to rural clients.
Bancassurance, Post offices, and Panchayats are the right channels of distribution for the rural populace. Furthermore, life insurance companies can also rope the village co-operatives, in the marketing channel. One cant under weigh the role of center of influence like village schoolmasters, market committee heads and heads of local bodies, who are very close to the potential rural policyholders and could convince them by their intimacy towards them and make them come close to life insurance.
By Dr. N. R. Nagarjan, Virudhunagar, Published in The Insurance Times, August 2004
