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Microinsurance India A LLIANZ AG , GTZ A N D UNDP P UBLIC P RIVATE P A R TNERS H IP A UGUST 20 06 MICROINSURANCE DEMAND AND MARKET PR OSPECTS INDIA Microinsurance: Demand and Market Prospects – India Allianz AG Allianz AG Group is one of the largest financial services providers in the world, with specialists in the fields of property and casualty insurance, life and health insurance, asset management and banking. Allianz AG is currently working with international help organizations to explore how insurance companies can contribute to reducing poverty by offering low premium protection in Asia. GTZ The Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH is an international cooperation enterprise for sustainable development with worldwide operations. It provides viable, forward -looking solutions for political, economic, ecological and so cial development in a globalised world. GTZ works in almost 130 countries of Africa, Asia, Latin America, the Eastern European countries in transition and the New Independent States (NIS) and maintains its own offices in 67 countries. GTZ is a federal ente rprise and the German Federal Ministry for Economic Cooperation and Development (BMZ) is its major client. The company also operates on behalf of other German ministries, partner -country governments and international clients, such as the European Commissio n, the United Nations and the World Bank, as well as on behalf of private enterprises. UNDP UNDP is the UN's global development network, advocating for change and connecting countries to knowledge, experience and resources to help people build a better li fe. We are on the ground in 166 countries, working with them to strengthen their capacities and create their own solutions to global and national development challenges. 40 years of development experience Programmes in 166 countries 135 offices around the world __________________________ The information used in this study is based on both publicly accessible sources of information (publications, specialist articles, internet sites, conference papers etc.) and non -public papers (for example internal reports from promoting institutions), as well as personal interviews with experts. While all information relied on has been reviewed for authenticity as far as possible, errors cannot be ruled out. Allianz AG, GTZ and UNDP do not accept any liability or give any guarantee for the validity, accuracy and completeness of the information provided in this study. Allianz AG, GTZ and UNDP do not assume any legal liability resulting from the use of the information provided in this study. The views e xpressed in this study do not necessarily represent those of Allianz AG, GTZ and UNDP. The designations and terminology employed and the presentation of material do not imply any expression of opinion on the part of the partners concerning microinsurance. Microinsurance: Demand and Market Prospects – India CONTENTS CONTENTS .........................................................................................................................................................I ABBREVIATIONS...........................................................................................................................................III INTRODUCING MICROINSURANCE ........................................................................................................IV EXECUTIVE SUMMARY ............................................................................................................................ VII CHAPTER I. BACKGROUND......................................................................................................................... 1 1.1 MACROECONOMIC SNAPSHOT OF INDIA...................................................................................................... 1 1.2 HISTORY OF INSURANCE IN INDIA............................................................................................................... 2 1.3 INSURANCE INDUSTRY OVERVIEW .............................................................................................................. 3 1.4 WHAT IS MICROINSURANCE? ...................................................................................................................... 4 1.5 HISTORY AND CURRENT STATUS OF MICROINSURANCE REGULATION ......................................................... 4 CHAPTER II. THE DEMAND FOR AND SUPPLY OF MICROINSURANCE......................................... 8 CHAPTER II. THE DEMAND FOR AND SUPPLY OF MICROINSURANCE......................................... 8 2.1 METHODOLOGY OF THE STUDY................................................................................................................... 8 2.2 INTRODUCTION ........................................................................................................................................... 9 2.3 SOCIOECONOMIC PROFILE OF MICROINSURANCE CLIENTS .......................................................................... 9 2.4 RISKS AND VULNERABILITIES ................................................................................................................... 10 2.5 FAMILIARITY WITH INSURANCE ................................................................................................................ 10 2.6 MARKETING STRATEGIES.......................................................................................................................... 11 2.7 GENDER AND THE DEMAND AND SUPPLY OF MICROINSURANCE................................................................. 12 2.8 DEMAND FOR HEALTH INSURANCE ........................................................................................................... 13 2.9 DEMAND FOR ASSET MICROINSURANCE .................................................................................................... 16 2.10 DEMAND FOR AGRICULTURAL INSURANCE ............................................................................................. 17 2.11 DEMAND FOR WEATHER INSURANCE ...................................................................................................... 18 2.12 DEMAND FOR LIFE AND DISABILITY INSURANCE ..................................................................................... 19 CHAPTER III. DISTRIBUTION CHANNELS............................................................................................. 25 3.1 PARTNERSHIP MODEL ............................................................................................................................... 25 3.2 AGENCY MODEL ....................................................................................................................................... 29 3.3 MICRO-AGENT MODEL .............................................................................................................................. 29 CHAPTER IV. SOCIAL SECURITY IN INDIA: OVERVIEW AND ROLE OF M ICROINSURANCE31 4.1 STRATEGIES TO MANAGE RISKS ................................................................................................................ 31 4.2 POLITICAL DEVELOPMENTS IN SOCIAL PROTECTION ................................................................................. 34 4.3 GAPS IN EXISTING SOCIAL SECURITY SCHEMES ......................................................................................... 34 4.4 POSSIBLE MICROINSURANCE PARTNERSHIPS IN INDIA: DONOR AGENCIES................................................ 35 CHAPTER V. SUMMARY RECOMMENDATIONS .................................................................................. 37 5.1 ISSUES IN PRODUCT DESIGN ...................................................................................................................... 37 5.2 MARKETING MICROINSURANCE ................................................................................................................ 37 5.3 DISTRIBUTION CHANNELS ......................................................................................................................... 38 5.4 CONSUMER PROTECTION .......................................................................................................................... 38 5.5 PROMOTE MICROINSURANCE REGULATION ............................................................................................... 38 5.6 EXPANDING THE INDUSTRY ...................................................................................................................... 39 5.7 SUPPORTING MICROINSURANCE INNOVATION ........................................................................................... 39 i Microinsurance: Demand and Market Prospects – India 5.8 GENDER AND MICROINSURANCE............................................................................................................... 39 5.9 CAPACITY BUILDING................................................................................................................................. 40 5.10 WORKING WITH COMMUNITY-BASED INSURANCE MODELS..................................................................... 40 5.11 PROSPECTS FOR REINSURANCE ............................................................................................................... 40 5.12 BUILDING ON THE LIMITED DEMAND STUDIES......................................................................................... 41 5.13 POLICY WORK/ENGAGING THE STATE .................................................................................................... 41 5.14 DATA COLLECTION ................................................................................................................................
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