The Hindu Business Line : Pvt insurers face rough terrain in countryside

``Not many people are aware of any private insurance company and even the few who did mention a private insurance company were hesitant to put their money."

Hyderabad , Sept. 13

INADEQUATE success in establishing their credibility in rural markets has made life tough for private insurance players.

Many people in the countryside are hesitant to buy the policies of private sector insurance companies perceiving them to be highly unsafe, according to a study by the Insurance Regulatory and Development Authority (IRDA).

These findings are both positive and negative.

Thanks to the notorious records of many non-banking finance companies in the rural areas, the public are suspicious of the very word `private'.

However, the findings come as good news for the ad agencies and regional press who would have a major role in developing appropriate communication packages aimed at the rural masses.

Banks and post offices can also look for good business as preferred institutions for both providing insurance policies and payment of premiums.

The key finding of a study, conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) in association with ING Insurance, is that the word `private' has a very negative image in the rural folks, causing worry and posing challenges to the private insurance operators.

``Not many people are aware of any private insurance company and even the few who did mention a private insurance company were hesitant to put their money because they perceived the private companies as unsafe.

The negative perception extends to all financial institutions which has private in their nomenclature,'' the study says.

According to IRDA, the study also suggests that it is important for private insurance companies to establish their credibility, particularly among the more educated and the village leaders to meet the challenge of gaining trust and building a positive image among villagers.

``This segment (of more educated and village leaders in the countryside) is relatively more aware and seeks better quality service.

"They are likely to be the early adopters and their influence will encourage other villagers to follow them,'' the FICCI-ING Insurance study suggests.

The study has also observed that though the insurance agents play a key role in persuading rural folks to go for insurance, the public preferred banks and post offices for buying the policies.

Bancassurance could be an effective alternative to the traditional `agents structure' in rural India, the study suggests.

While this is the case with individual policies, the study recommends approaching various groups such as self-help groups (SHGs), youth clubs and cooperative societies for group insurance policies.

Finding that the penetration of non-life insurance and even the awareness about general insurance is very low in the rural sector, the study, however, observes that there is substantial potential for general insurance in the countryside.

``Presently, penetration of general insurance in rural areas is mostly driven by mandatory requirements category. But people do perceive security as the foremost benefit of general insurance.

"This shows the potential that exists for general insurance, which needs to be tapped more aggressively and systematically,'' the study says.

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