While the economic crisis has hurt mainstream insurance providers, microinsurance continues growing rapidly. Kamesh Goyal, CEO of Bajaj Allianz in India, explains why two million new customers in one year is only the start.
 | Kamesh Goyal, CEO Bajaj Allianz, India"In India various government schemes have increased the income levels of our rural population. So while we see a slowdown in mainstream business, the micro insurance segment continues to be robust." (Photo: Bajaj Allianz) |
How important is microinsurance for Bajaj Allianz?
Micro insurance is very important for us. The opportunity is huge. Fifty percent of India’s population doesn’t have access to any financial products. We would like to emerge as the biggest player in this segment. The challenge is scaling up the model while reducing costs.
How different is it from your normal insurance business in India?
The real challenge is to create processes that are extremely cost efficient. The premium per policy could be as low as three euros, so cost management is vitally important. The second issue we face is reaching out to these customers who pay premiums on a weekly or monthly basis.
Finally, there is the challenge of designing products that take into account the specific requirements of microinsurance customers.
How many microinsurance customers do you have?
In the last financial year we reached out to 2 million customers with our microinsurance policies, which amounts to approximately 15 percent of our customers.
 | Microinsurance Coverage (click on the image to enlarge)See the percentage of poor people in Africa and Asia without insurance coverage (Photo: Bajaj-Allianz) |
You offer different microinsurance products like life insurance or health insurance. What are your experiences with these different policies?
Life insurance products that have protection and savings elements have performed well. In health insurance we are offering a unique model where a pool is created for members, which they then manage themselves. Claims that exceed the financial means of the community are paid by us. The challenge is to scale up this pool model as it requires intensive training.
What policies are still missing?
We are looking at single premium life policies with a guaranteed maturity value. We are looking at a defined benefit health product for this segment. Over time we would like to offer the entire suite of products to this segment.
Do you feel the impact of the current economic crisis, both in your mainstream business and in micro insurance?
This is interesting. In India various government schemes have increased the income levels of our rural population. So while we see a slowdown in mainstream business, the micro insurance segment continues to be robust. Our aspiration is to reach out to 10 million people in three years.
editor: Thilo Kunzemann
publishing date: June 9, 2009
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Micro Insurance
Yes I do agree that, we have a great opportunity in this segment as only few players are present in India who cater to this segment.And majority of the population belongs to this segment...