For the longest, the care of the insurance sector in India has been largely urban oriented due to various reasons. Although there has been a silent economic revolution in the rural section since the late 1960s, factors such as literacy rates, low awareness and complexity of insurance documents have been presented as a major challenge for both public and private insurance. The firm to expand its path in rural India. Due to planned efforts and complete commitment, great dividends can be generated from the rural areas, thereby creating tremendous potential for the development of insurance sector. Therefore, there is a serious need to consider the expansion of insurance domains in the rural areas by insurance companies, as well as the Central and State Governments. Insurance in Rural India.
According to the report of the Rangarajan Committee appointed by the government, to review the method of measurement of the poverty prepared for the Planning Commission in June 2014, the percentage of poverty line (BPL) families dropped at the national level at 2.25 percent . A sum of approximately 21.9 percent per annum in the year 2011-12, from 2011-12 In the major trends seen in this report, it became clear that the decline in poverty was stagnant in rural areas because the percentage of BPL population decreased from 42per cent (2004-05) to 25.8 percent (2011-12), in the urban areas 12per Contrary to the percentage, with a considerable decline of approximately 17per percent. It clearly shows that the income of the property has been increased and the property has been acquired between the rural population, subsequently creating opportunities for exploration and expansion of insurance business in the otherwise unused rural market. Despite having a huge potential, there are many challenges and failures for the rural market insurance segment. For example, in the documents of insurance policies with fine prints, technical jargons and other broad words, complexity becomes difficult for the common man to understand. With a large number of rural people battling for lack of education, awareness or even basic literacy, insurance appears to be an intangible product with very low value proposition. Apart from this, people are also unable to produce various certificates required for the processing of insurance claims. In addition, rural people have to face a major problem in understanding the difference between the benefits made by the Indian government through various insurance programs, and what they actually get. In Chit Fund scams in rural areas people have also been given an example of losing money, which makes it difficult to trust insurance companies because they are not able to differentiate between legitimate insurance providers and suspected chit funds.
While insurance companies, as well as intermediaries, do not face a major issue in the service of the urban population, where the level of awareness is relatively high, expansion to rural areas is a major challenge. Therefore it is very important for the insurers to understand the needs of the population and change the policies accordingly to recognize the potential and opportunities for large scale insurance companies and work accordingly.
Entry level of players of the existing insurance sector is not significant in the very potential rural market. Customers in rural areas do not have direct access to many insurance companies. Due to the general lack of awareness about fixed dates for payment of premium amount, the lapse rate of policies is high. Apart from this, there is a lack of focus on pure risk policies by insurance providers and inclusion of policy schemes like ‘low premium maximum benefit’ in rural areas. Therefore, by the government, both public and private, both insurers need adequate investment so that insurance can be seen in rural areas and it can be promoted as a risk mitigation tool among the rural population.
To increase insurance penetration, the Insurance Regulatory and Development Authority (IRDAI) has allowed micro insurance products to be distributed through point-of-sales (POS). To make it more convenient, more domain players are coming up with their own products and services to create awareness about the importance of insurance among rural populations.
The insurance sector plays an important role in the economic development and stability of a country, its citizens and homes. Therefore, reducing the wide opportunities related to the development of insurance sector in rural India can have a direct impact on rural development and then the economic growth of the country. Therefore, it is essential for public and private insurance companies and intermediaries as well as central and state governments to be actively involved in the insurance facility in rural India. The need for such cooperation is especially high, the rapid rural population is growing socio-economically and is keeping urban Indians in their habit of consumption.
Source : enterpenure