Despite a very healthy growth of the life insurance and general insurance businesses in India during the first decade of this century,the problem of untapped potential persists. This issue was the prime motivation for the government to open up the sector to private players,who,in turn,looked at this issue as a great opportunity. A lot of money has been invested in the industry and its contribution to the GDP increased by over 3% over a period of 10 years. The industry generated employment opportunities in a big way and also mobilised savings of people for investment in infrastructure and other sectors vital for growth of economy. Amid the euphoria of the initial success and the recent slowdown following several corrective actions by the regulator,the vital issue of harnessing the potential in all strata of the economy got ignored. Several large and vital market segments remained dormant as they were before the liberalisation took off. As a result,the untapped market at the bottom of the pyramid remains so even now. Obligatory rural or social sector businesses have embellished the financial statements and have enabled the companies to stay away from yet another cause of penalty by the regulator; but,by no standard,have they enabled the companies to provide the much-needed financial security to those who need it the most. Insurance being an important subset of financial services,the theory of financial inclusion is as much applicable to the insurance sector as it is to the banking industry. Insurance is far less about return on investment than what it is for readily providing the required or nearly required sum of money to a person or a family,which is unfortunately a victim of a probable cause of financial or emotional distress. This support is naturally needed most by those who are at best in the middle class,but mostly in the BPL category. In such circumstances,they resort to borrowing from informal sources and,finally,find themselves in a bigger financial mess. There is an urgent need to develop and market low-cost products for such segments and the marketing activity also needs to ensure timely and hassle-free delivery of the benefits. This would require a paradigm shift from marketing to those who can afford to marketing to the ignorant and the incapables. This is not an easy job because,all said and done,profit motive comes first in all businesses. Hence,the real challenge is how to make business with such people fairly profitable on the basis of volume. The problem with all insurance products,whether it is an endowment life policy or a householder policy or even a family floater health policy,is the complexity of terms and conditions. Secondly,they are loaded with too many cost factors,which discourage financially stressed customers from taking active interest in the product or services. The issue of KYC also comes in the way. I think there are a lot of lessons to be learnt from the telecom and the FMCG industries. One paisa per second scheme for mobile users and the one rupee sachet for long and shining hair are the classic examples of penetrating the BPL market and yet remaining profitable. A house destroyed by flood or fire,a bullock dying of an epidemic,a house hit by earthquake or lightning,a bread earner or the mother of small children dying of dengue or snake bite or of accident on road or on rail; a family head killed by dacoits or someone suffering from cancer or incapacitated by paralysis or the victims of terror,such as those who fell to the bullets of terrorists on railway platform,must be necessarily provided financial security and that too with due dignity and speed. The industry leaders will have to quickly design such strategies and implement to grow with the growth in the potentiality of the market. With the new business environment created by IT as an enabler and Aadhar cards being introduced and the recent decision of the Irda to recognise bank KYC norms as acceptable for issuing a policy will help insurers reach out to such customers with very innovative and simple products. There is no such substitute for insurance in times of crisis,but it will be great if industry leaders introduce something that is no-frills type,but fully loaded with benefits of financial security. Distribution cost can be minimised by making the products ride on other financial products. There seems to be a vast opportunity waiting to be tapped by eliciting support of SHGs,NGOs,MFIs and RRBs. The writer is former MD & CEO,Star Union Dai-ichi Life Insurance
