micro insurance awareness in india: a study of
SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 MICRO INSURANCE AWARENESS IN INDIA: A STUDY OF ALLAHABAD DISTRICT FARAH FAROOQUI, Research Scholar Department of Commerce and Business Administration University of Allahabad, Allahabad- India ABSTRACT The liberalization of economy has strengthened the argument "to strengthen the people at micro level i.e. at the grass root level of the society,” the people below poverty line. Action plans are made to strengthen the un-privileged section of society by providing micro-Insurance to the people living therein. This particular section needs a conviction that buying insurance is more worthwhile to them than being without it. Creating awareness among the poor masses to insure the assets, the lives and the health of their families has remained an elusive goal, notwithstanding the recent introduction of specialist insurance regulation that is very insurer - friendly. The task of mobilizing the efforts of insurance unit to make this goal partly achievable has yet remained a slow starter. In this context the present research has been undertaken with the objective of analyzing the awareness of micro insurance among the agriculture labour of rural areas of Allahabad district and study the role of MFI, SHG's and NGO's in creating awareness and the study will suggest measures for increasing the awareness of micro insurance schemes. The study is based on primary and secondary data. The sample size is 125. The road ahead is very tough but it can be filled with basket of growth opportunity. Keywords: Below Poverty Line, Micro Insurance, MFI’s, NGO’S www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [86] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 INTRODUCTION: Risk is a fact of life that we all have to live with. It is to be seen that how an individual manages these risks in different prospective. A common form of risk protection is insurance. Insurance provides individuals or business with a buffer against the adverse outcome of a perceived risk. Insurance however is not always accessible an affordable to everyone. It is observed that in majority of countries the salaried income earners, middle class and the wealthy who are insured. The poor, rural dwellers, small businesses and irregular wage earners often do not get covered by insurance because (1) they have other pressing bread and butter issues to worry about, (2) they are not aware of the availability of these products. (3) They cannot final affordable insurance products to suit their needs. The best way to provide insurance to low income households is through Micro-Insurance. Thus the term micro-Insurance refers to a low value insurance product designed for low income earners. A usually these from poor households have very limited means as scare resource base to support them. This makes them more vulnerable to risk. Hence availability of microinsurance would in some ways provide the poor with some protection, peace of mind and dignity. DEVELOPMENT OF MICRO INSURANCE IN INDIA: Historically in India, a few Micro - Insurance schemes were initiated either by NGO's or by trust hospital. These schemes have now gathered momentum partly due to development of micro-finance activity and partly due to regulation made by IRDA in 2005 made it mandatory for all formal insurance companies to extend their activities to rural as well as identified social sector in the country. Consequently, the microInsurance Industry in India growing rapidly. Almost all the public and private Insurance Companies launched their products. NEED OF THE STUDY: Insurance education is a valuable and important activity because; the lack of understanding of insurance and its benefits is a major obstacle to the expansion of micro-insurance. Those who do not understand how insurance works are unlikely to trust this sector. By creating awareness about the insurance, families are at least given the option of considering insurance to their financial planning strategies. Insurance awareness is therefore after considered as an integral part of micro insurance scheme. This study is an attempt to analyze about the awareness of micro insurance scheme among the agriculture labour and role played by NGO's, MFI's, SHG's in creating awareness among the untapped market of insurance Industry and to suggest measures for the same. LITERATURE REVIEW: The present study embodies a brief review of the research done in the area of micro insurance. A study entitled "Trend and Strategies for further extension" by Ahuja Rajiv and Khasnobis Guha Basudeb. In this article the author analyse the early evidence on Micro-insurance already available. The article highlights the current initiatives being contemplated to strengthen micro insurance activity in the country and suggest specific ways that can help in promoting insurance to the target segment. In the study entitled "An untapped opportunity in emerging market" by Balan Govind. The author has deliberated upon he meaning and importance of micro insurance. Author suggested insurance companies that insurer should look at micro - insurance seriously not just to fulfill potential regularity requirement but as a viable business opportunity. A study entitled "Innovating at the BOP: Delivering Micro-insurance in Kalahandi and beyond" by Sarthak Gaurav and Ana Poala Gomez Acosta and Luis flores Ballestone..Author tries to emphasize upon the effectiveness of formal and informal risk response mechanism and analyse the issue in provision of market based risk management solution and micro insurance in backward rural communities and resource poor geographies. In the study entitled "Financial inclusion, micro insurance and the Indian insurance Sector" by Sinha Pratap Ram. In this article the author has deliberated on the deregulation of the Insurance Sector in India. The article throws light on the various studies on the potential market as well as initiatives taken by IRDA regarding development of micro-insurance. www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [87] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 Venkata Raman Rao (2008) the study reveals that Micro Insurance is not an opportunity but a responsibility and to serve this responsibility good awareness campaign is needed. Micro insurance is offering real solution to the billions of rural people that raise the awareness of Micro Insurance as a key issue in coming future. RESEARCH METHODOLOGY: OBJECTIVE: To study the awareness of micro insurance schemes among agricultural labour. To study the preference for public and private insurance company. To study the roe of NGO's, SHG's and MFI's in creating awareness of micro insurance. To suggest measures for increasing the awareness of micro insurance. RESEARCH DESIGN: Universe-finite Sample technique - Purposive sampling Sample size - 125 AREA OF STUDY: The Area selected for the present research comprise of rural areas of Allahabad district. The District population comprise of more than 30 lacks were 55% of the population live inside poverty line. DATA COLLECTION: The present study is based on both Primary and Secondary data. Primary data has been collected through a well designed questionnaire which contained both close and open ended question related to parameters selected for testing of awareness of micro insurance schemes of public and private insurance companies. Secondary data information is explored from referred journals, magazines, books and related websites etc. ANALYSIS OF DATA: Data has been analyzed by using simple percentage method. DEMOGRAPHIC PROFILE OF RESPONDENT: GENDER: Female, 32% Male, 68% Male Female The data speaks that majority of respondents are males. This shows that males are more concern about risk coverage and future saving than female. www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [88] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 EDUCATION: Inter, 4% 6-High School, 16% Illerate, 42% Till 5th, 38% Illerate Till 5th 6-High School Inter The data reveals that majority of respondent are illiterate. MONTHLY INCOME PROFILE: 5000 & above, 3% Less than 3000, 19% 4000-5000, 22% 3000-4000, 56% 5000 & above Less than 3000 3000-4000 4000-5000 56% of the study samples have an average monthly income Rs. 3000 - 4000 while 22% earns Rs. 4000 5000. Only one fifth earns less than Rs. 3,000 per month. As per the response of respondents regarding the question about awareness of Micro - Insurance schemes it has been observed that 60% of the respondents are aware about micro - insurance schemes launched by Insurance Companies, while 40% of the respondents are unaware abut the benefits of micro - insurance which is basically designed for these people. This surprising figure may be due to illiteracy, lack of proper awareness tools, lack of access to micro insurance agents like MFI's NGO and SHG's. The illiterate female respondents are found to more unaware about micro insurance scheme. Unaware, 40% Aware, 60% Aw are www.scholarsworld.net Unaw are [email protected] Volume. III, Issue II, April 2015 [89] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 DEPICTS AWARENESS OF RESPONDENTS TOWARDS MICRO-INSURANCE: Tools of awareness play an important role in creating awareness about given below shows that out of 75 respondents (i.e. 60% of respondents who are aware above micro insurance schemes) 37% of the respondents are aware through month to month awareness 22% were aware through friends and relatives, 15% through door to door awareness campaign, 11% through group meeting organized by NGO's SHG's etc. 9% through Audio visuals, 6% through panchayat and chaupals. Panchayat & Chaupal Audio Visual Group Meetings Door to door awareness compaign Awareness through friends & relatives Mouth to Mouth Awareness 0% 5% 10% 15% 20% 25% 30% 35% 40% Depicts Tools regarding awareness of micro-insurance On the analysis of information regarding motivation buying micro insurance. The data reveals that about 76% of the aware respondents are ready to buy insurance while 24% of respondents are not willing to buy insurance policy on about of reason like less income, less saving and less awareness amongst the people. Not Ready to Buy Microinsurance, 24% Ready to Buy Microinsurance, 76% Ready to Buy Micro-insurance Not Ready to Buy Micro-insurance Depicts respondents attitude towards micro-insurance Regarding the various types of micro insurance policies 63% of the respondent preferred Life Insurance Policies as it is an important measure of financial security for low income household. 31% preferred health insurance policies while 6% preferred crop and live stock insurance. It is glaring to observe that the respondent heard were not aware of disability, property and disaster micro insurance. Data regarding the preferences of life insurance companies reveals that out of 60% of the aware respondents majority i.e. 72% of them knew about micro insurance service provider specially L.I.C. This shows that public companies are leader of micro insurance market. www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [90] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 80% LIC, 72% 70% 60% 50% 40% 30% ICICI Pru., 15% 20% TATA AIG, 7% 10% Bajaj Allianz, 4% Others, 2% 0% LIC LIC ICICI Pru. ICICI Pru. TATA AIG TATA AIG Bajaj Allianz Bajaj Allianz Others Others Depicts: Preference towards Micro-insurance companies ROLE OF SHG’S, MFI’S AND NGO’S IN CREATING AWARENESS OF MICRO INSURANCE: To reach the poor is still a difficult task for insurance companies due to infrastructure and cost consideration. The partnership model uses a synergistic approach that involves collaboration with MFI, SHG’s and NGO's. in present scenario these institutions are regarded as cooperate agents as per regulation of IDRA. As the illiteracy level being low in the target market various awareness tools are used by these agents viz songs, slogan, organized meetings, group discussions and street theatre etc. These institutions faced a challenge in promoting insurance, as poor people generally consider insurance to be non feasible option for them. Various MFI's NGO's which worked as micro insurance agents are SKS, BASIX, SEWA, SPANDANA, DHAN FOUNDATION, and Micro Insurance Academy etc. As per the IRDA Annual report of 2012-2013 numbers of micro insurance agents are increasing year by year. FINDING AND SUGGESTIONS: Through the analysis of primary and secondary data it was revealed that more than half of the respondents were aware about micro insurance schemes. About 40% of the respondents are unaware about micro insurance schemes. Insurance provider should provide these agriculture labour facts, data and specific knowledge to make them aware of their risk exposure and insurance opportunities and consequences. Companies should provide proper guidance to rural masses as to make them understand about micro insurance utility concepts. Advertisement campaign must be made in local languages. Audio/visual technique should be used as mostly unaware people are illiterate. Analysis regarding the tools of awareness indicates that majority of them are aware through mouth to mouth awareness, awareness through relatives and friends and door to door awareness. It is suggested to the insurance provider that panchayats and choupals should be made more effective in communicating the message regarding awareness of various schemes as rural population are more closely linked with these social groups. Since the population are awared about the insurance product nearly about fourth fifth of the respondent are ready to buy. It is suggested that companies should use more effective promotion techniques in order to convert awareness into business. The Insurance provider must trained employees in a proper and effective manner in order to sell the micro insurance products to agriculture labour. The message should relate to the risk coverage in case of casualty. Insurance provider should blend the message according to local belief, customs and values of the agriculture labour. After anlaysing the data it has been revealed that majority of the respondent were aware about life and health policies. It is suggested to the insurance provider that they should make them aware about the other products available and also make them understand about its utility. Rallies and enlightment campaign must be conducted. Along with advertisement certain role plays and street plays must be done in village so that the rural people may become aware of the programme in much faster way. The insurance companies should focus on all activities ancillary to agriculture so that this section of rural population can get benefit of micro insurance schemes. www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [91] SCHOLARS WORLD -INTERNATINAL REFEREED MULTIDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH Online: ISSN 2320-3145, Print: ISSN 2319-5789 Out of all the aware respondents near about three fourth of them shows their preference towards LIC. Other organisation which the respondent preferred is ICICI Prudential, TATA AIG, and Bajaj Allianz etc. It is suggested that private players should improve their brand image. The insurer should use sign boards, billboard, use of tag line etc., they should also maintain public relation and organize prevention campaign. CONCLUSION: The result indicates that awareness of micro insurance products available among the agriculture labour is low. They don't prefer giving a good chunk of their income to the insurance provider to hedge themselves against the unknown and uncertain future risk. So, insurance companies MFI, SHG's and NGO's should make more effective effort in increasing the awareness about micro insurance which is a boon for low income people. REFERENCES: 1. Annual Report, IRDA 2010-11,2011-12 and 2012-13 2. Allianz AG, GTZ and UNDP (2006), "Micro insurance Demand and Market Perspects - India", Private Public Partnership. 3. Basanta K. Sahu - "Micro insurance in India: Outreach and Efficiency", Centre for Micro Finance Research, Lucknow. 4. Chandhok Arun Gunita (2009), "Insurance - A Tool to Eradicate and a vehicle to Economic Development", International Research Journal of Finance and Economics Issue 24. Page no. 65-69 5. Chandel, Kumar and Rana (2009), "Understanding risk and returns in mutual fund investments", Apeejay Journal of Management, Jan. 2009 Vol. 4 No. 1. Page no.112-116 6. Rao & Samuel (2009), "The Indian Insurance Industry - inching forward", Insurance Chronicle, January, 2009. page no.38-43 7. Saha (2010), "Insuring the bottom of the Pyramid", insurance chronicle, January, 2010. Page no.42-49 8. Singh P.P. and Miglani Shweta (2011), "Micro Insurance Schemes: Awareness and future prospects among labour class", Confeence on Inclusive and Sustainable growth. Role of Industry Government and Society, Conference procdding, 2011. 9. Thankom Arun and Bendig Mirko (2010),"Micro Financial Services & Risk Management", Lancashire Business School Working Paper, New Series, Vol. 2, No. 1. 10. Venkata Raman Rao "Life Insurance awareness in rural India: Micro Insurance lesson to learn and teach, Bimaquest Vol. VIII issue-I. WEBSITES: http.//en.wikipedia.org/wiki/Micro Insurance accessed on 1 july 2013 www.iciciprlife.com/microinsurance/microinsurance-plan.htm accessed on 22 sept 2014 www.tataaig.lif.com/pdf/5c-rural-draft%20press/20release.pdf accessed on 12 nov 2014 ---- www.scholarsworld.net [email protected] Volume. III, Issue II, April 2015 [92]
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