War Room

Team Kung-Fu Pandey || Batch of 2014, FMS Delhi Financial services- Rural health insurance Aparajita Puri Shivani Mittal

[email protected] [email protected]

Vinay Prithiani Vineet Jain

[email protected] [email protected]

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy • Conclusion •

Case Approach Problem statement Objective: To enable MIBL to reach to rural customers with a suitable Health Insurance product

Key questions to be answered

• How to innovate disruptively , to enable health insurance reach to rural masses? Product catering to lower income groups in terms of premium payable Make insurance a priority list like historical trio of “Roti-Kapda-Makaan” Marketing of such insurance product to the masses

Methodology Research

Issue

Issue

Identification

Analysis

Demand side • Primary : Interviews and word association tests with 28 people from villages in UP & Haryana:  Chakkarpur  Bateshwar  Baduan • Secondary : Insurance awareness survey , IRDA and various other reports on consumer health seeking behaviour and consumption expenditure

Strategy

Actionables

Roll out plan

Supply side • Primary : Interviews and interactions from industry experts of:  Health insurance  Hospitals  MFIs • Secondary : Various industry reports on hospitality , health insurance and MFIs prepared by government and private firms

Case approach • Insurance Industry analysis •

• •

Insurance sector in India Insurance brokers and role

Rural India understanding • Issue identification • Strategy overview • Implementing strategy • Conclusion

Overview: Insurance in India What is insurance ?

•

A risk mitigation strategy that allows individuals to transfer risk from • an individual to a pool of people • across different points in time

Indian insurance: Trends • Insurance market is expected to reach US$140B, growing at CAGR 22% • Total 49 insurance companies in India, 24 offering general insurance • Insurance density and penetration levels have been rising marginally

Indian insurance: Growth drivers • General insurance expected to see increase in insurance penetration and density levels • Health insurance accounts for 23% share of general insurance; expected to grow at ~30%

Takeaway Indian insurance sector is 10th largest in the world; growth in health insurance and increasing rural uptake to drive future growth

• Five new distribution channels ( broking , bancassurance etc.) account for ~40% of private insurance from 0% in 2001

• Increasing rural penetration to drive growth • Companies expected to add Rs. 1000 Cr. to net worth from 200M rural people looking for alternate savings channels

Case approach • Insurance Industry analysis •

• •

Insurance sector in India Insurance brokers and role

Rural India understanding • Issue identification • Strategy overview • Implementing strategy • Conclusion •

Takeaway Insurance broker adds value to three key stake holders: insured, insurer and reinsurer facilitated by other intermediaries

Insurance brokers and their role • Brokers add value to multiple Who is aninsurance insurance broker ? companies by increasing their reach and sales

• Brokers add value to Insurance brokers act as an intermediary between clients and insurance companies insured by helping him They use their in-depthUnderstand knowledge of risks and the insurance to create buy market most suitable needs Commission and arrange suitable insurance policies and arrange cover insurance product at

agreements

Product branding and promotion Negotiating policies as per customer needs Find a suitable company to transfer portfolio risks of insurance company • Reinsurance company helps reduce risk of insurance company and provides reinvestment opportunities to reinsurer

of the clients

Insurance broker

Negotiate premium claim & other conditions with reinsurance company

Educate ,sell insurance & collect premiums

favorable price

Facilitate claim settlement

Leverage intermediaries like MFIs, Cooperatives to reach target • They act as facilitators customers for broker to intermediate between insurer and insured.

Understanding rural India

Case approach • Insurance Industry analysis • Rural India understanding •

• • • •

Who is the rural consumer? Exposure to financial services Attitude towards health/ insurance Why is penetration low: Issues

Issue identification • Strategy overview • Implementing strategy • Conclusion •

Takeaway The rural consumer is diverse and has different needs. Even with low incomes, healthcare eats a substantial share of his expenditure

Who is the rural consumer ? Socio – economic characteristics • Family: 74% stay in nuclear families and only 26 % in Joint families

Rural population-Literacy

• Housing :48 % of rural population resides in pucca houses , rest 52 % in kuccha and semi pucca dwellings • Occupation: 66 % of rural population is engaged in agricultural activities , followed by construction(12.4%) and manufacturing (6.5%)

38% 62%

Illiterate

Literate

Occupation (%) Self –employed (non agri.)

31.39

Agri. Labour

25.14

Other Labour

23.83

Self employed (in agri.)

19.63

Income and expenditure • Of the rural population, 34% lie Below Poverty Line and 66% Above Poverty Line

Income class (average annual per capita)

• Average annual household income is Rs. 88,660 , out of which at an average 23% is saved, rest being household consumption expenditure

Upto 10000

31.39

10001-16000

25.14

• The share of expenditure on non foods is rising with rising income

16001-27000

23.83

27001 and above

19.63

Total

100

• Combination of healthcare and transport has taken up a substantial share of rural spends

Consumption pattern

51%

Food

49%

Non food

Case approach • Insurance Industry analysis • Rural India understanding •

• • • •

Who is the rural consumer? Exposure to financial services Attitude towards health/ insurance Why is penetration low: Issues

Issue identification • Strategy overview • Implementing strategy • Conclusion •

Exposure to financial services in rural India Financial services in rural India Rural population • Rural India has seen recent upsurge in availability of financial services and infrastructure • Bank branch density in rural India is higher than Russia, Brazil

Rural India has seen steep growth in financial services in the last decade; However, non-life insurance penetration has lagged

26%

41% 59%

74%

• ~30% of rural farmers have credit cards • Share of formal rural credit has grown by ~27% over last 10 years

Banked

Unbanked

Formal

Informal

Insurance in rural India • Only 12% of rural India has opted for any form of insurance

Takeaway

Share of rural credit

• In contrast to financial services, current uptake of insurance in rural India is very low • However, there is clear trend of increasing acceptability of insurance with financial inclusion • Life insurance penetration in the banked segment of rural India is as high as 40%

• Non-life insurance products are expected to row in the near future

Reach of rural insurance

Rural insurance uptake

Life

12.1%

General

0.4%

Health

0.7%

Motor

3.1%

Tractor

0.3%

Crop

0.3%

Case approach • Insurance Industry analysis • Rural India understanding •

• • • •

Who is the rural consumer? Exposure to financial services Attitude towards health/ insurance Why is penetration low: Issues

Issue identification • Strategy overview • Implementing strategy • Conclusion •

Consumer’s attitude towards health and insurance Indian poor and health • Health care costs - responsible for ~55% decline to poverty

Where do the rural poor go for treatment?

• ~50% poor families have major health crisis each year

• Hospitals are visited ~30% of reported health incidents • Rural families prefer private healthcare; ~75% of health expenses are attributable to pvt. clinics and hospitals • Medicines represent largest cost, ~40% of total expense

34%

40%

36%

30% 20% 10%

12%

15% 3%

0% Primary health care

• Major source of finance for health expenditure is loans from moneylenders, friends & family

Govt. hospital

Private clinic

Private hospital

Other

Indian poor and insurance

Takeaway Although health risk is perceived as high, few have health insurance owing to lack of suitable products. Private health facilities are favored

What is the biggest risk as perceived by rural consumer?

• Majority rural consumers feel health insurance schemes in their present form offer limited value

80%

• Impediments to health insurance include:

60%

• Complexity of insurance product

40%

• Lack of easy access (Delivery)

20%

• High premiums • Poor claim-settlement ratio

63% 18%

12%

7%

0% Health risk Death risk

Property Crop failure loss

“There is a huge mismatch between the supply and demand for health insurance owing to the relative complexity of the product…thus the health risk, although recognized by the poor, remains unmitigated” R. Devaprakash, Project Director, CARE

Case approach • Insurance Industry analysis • Rural India understanding •

• • • •

Who is the rural consumer? Exposure to financial services Attitude towards health/ insurance Why is penetration low: Issues

Issue identification • Strategy overview • Implementing strategy • Conclusion •

Why health insurance penetration is low: Issues

Awareness

Never heard

Willingness to buy

Ability to buy

Demand side

Value Recognition

Wrong perception Status Quo Theory

Complexity

Documents needed Prospect Theory

Eligibility and extent

Need for low Premiums

High Default

Settlement process

Payment Terms

Relative Value

Design difficulties

Supply side

Mistrust

Company

Hospital

Operational bottlenecks High risk to health Health infrastructure

Sales network creation

Premium collection

Documentation

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion •

Demand side issues (1/5) Demand side

Awareness

Ability to buy

Value Recognition

Willingness to buy

Complexity

Mistrust

54% of all uninsured rural people said that they could not buy health insurance as it was “too expensive ” Financial product progression with rising income Typical micro health insurance scheme premiums are Rs.150-200 per person per month, 10-15% of average monthly spend This when health insurance is not the top priority in financial services makes it expensive for most

Potential solutions Design products which have reduced premiums or provide other forms of premium payment

Savings account

Life Insurance

General Insurance “Har mahiney paisey dena thoda chubhta hai” 90% of the rural population spends less than Rs.1500 per capita per month

Health Insurance

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues (2/5)

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion

Willingness to buy

Ability to buy

Demand side

Value Recognition

Awareness

•

Complexity

Mistrust

Only 9% of all rural Indians have heard of health insurance, and much lesser understand its concept Statewise Awareness Rajasthan

Perceived benefits of health insurance 0%

4%

9% 11%

Southern Bihar Haryana

2%

7%

Potential solutions

Maharashtra

41%

3%

12%

Eastern

8%

Andhra Pradesh

6%

Northern 10%

Health insurance awarenenes is heavily skewed by geography

15%

55%

22%

5%

37% 34%

16%

5%

20%

0%

10%

Critical illness All illness

30%

16%

Mizoram

50%

14%

15%

0%

Cashless Only OPD

11%

Uttarakhand

Not just inform, but educate people about the concept of health insurance

36%

10% 8%

Western Gujarat

No benefits

27%

6%

20%

30%

40%

50%

60%

Most rural people are not aware of all entitled benefits of health insurance

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion

Demand side issues (3/5) Demand side

Awareness

•

“Hum toh fit hai sahab, beemar nahi padenge” – Resident, Chakkarpur, Haryana

Reinforce magnitude of potential financial and social loss. Provide frequent gratification

Value Recognition

Complexity

Mistrust

Certain behavioral biases block out health insurance because of its intangible and future oriented nature

Status Quo Bias

Potential solutions

Willingness to buy

Ability to buy

• People believe that the present state will continue indefinitely • They have the “I wont fall ill” assumption • They assign a very small probability to the incidence of a major disease • If this probability is below a threshold which they deem significant, they block it out completely

Prospect Theory “Jab kabhi beemar padenge tab dekhenge, abhi nahi sochte iske baare mein” - Resident, Budaun, Uttar Pradesh

Relative Perceived Value “Aur bahut saare kharche hai humare roz ke, ye ek aur kharcha kyu kare” - Resident, Bateshwar, Uttar Pradesh

• People end to discount future benefits a lot more than present losses

• The insurance product is not tangible and so people will assign a lower value to it compared to other tangible things

• They are unable to imagine the scale of potential financial and social distress that comes with a major illness

• People have multiple bad days and so they don’t see the value in saving for one very bad day

• They are unable to appreciate benefits as they are uncertain and far into the future

• Concept of saving and risk hedging is not understood by most, they don’t see the point

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion

Demand side issues (4/5) Demand side

Awareness

•

Potential solutions

Reduce caveats and make product simple to explain and understand, minimum T&Cs and simple paperwork

Ability to buy

Value Recognition

Willingness to buy

Complexity

Mistrust

Schemes are too complex for the rural people to understand, misunderstanding leads to claim rejections “What the rural customer really wants is a product that he can understand and trust. Everything else apart, if we can show them transparency, they trust us” - Kartik Mehta, CEO Pahalfinance Documents needed

Eligibility/Extent

• Many people are illiterate and not capable of understanding paperwork

• Caveats in T&Cs, diseases covered and extent of cover are not understood easily by people

• Claims settlements are an issue due to complex documentation

• Most rural people cant differentiate one disease from another

• This leads to low claims to settlement which makes people lose trust

• They are permanently aggrieved if their claim is rejected even on legitimate grounds

Settlement process • Multiple intermediaries makes it difficult for the insured to get claims processed • People don’t understand the range of processes to be adopted • Prior intimation for cashless, people don’t have the money to pay and then reclaim in case of emergencies

Payment Terms • Cashless services are fundamental, and are not usually available for emergencies • Many people don’t have bank accounts, hence premium payments are cumbersome • Premium amounts are larger for less frequent premium collections

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion

Demand side issues (5/5) Ability to buy

Demand side

Value Recognition

Awareness

•

Only Profit seeking

Piggy-back on networks or individuals who have high social equity with the locals

Complexity

Mistrust

There are too many caveats in most health insurance schemes, and this is the main cause of mistrust Rural mindset against insurers

Potential solutions

Willingness to buy

Outsiders

Trying to loot me

Insurer wont honour claim

Hospital wont honour claim

Some Unpleasant past experiences “A man died of a severe infection, but not before his wife spent a lot of money on medicines and doctors. After his death, she submitted the bills to the insurance company, but the company refused to pay up on the grounds that he had never spent a night in the hospital. Appalled by this incident, all the women in her borrowing group stopped paying premiums.”

“One woman said that she decided not to renew her health insurance after SKS refused to reimburse her when she went to the hospital with a stomach infection as the policy only covered catastrophic events. A stomach infection, as horrible as it can be, did not qualify. It wasn’t clear if she understood the distinction.”

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion •

Supply side issues (1/2) Supply side Need for low Premiums

Design difficulties

High Default

Operational bottlenecks High risk to health

Health infrastructure

Sales network creation

Premium collection

Documentation

Low premiums are required while operational costs and systematic risks are high in rural areas

“Many insurance companies are not very serious about rural areas, they don’t have representatives here” - Dr. Zain Khatib, Government health centre, Hoobly, Karnataka

People can’t afford high premiums

Potential solutions

Look for alternate payment models for revenues and partner with existing networks to reduce costs

Costs and risks in traditional insurance

Costs and risks in micro insurance

Lower revenues with high defaults High expected frequency of claims Low growth with low renewal rate High operational costs High demand generation costs

Severe margin pressures

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification •

• •

Demand side issues Supply side issues

Strategy overview • Implementing strategy • Conclusion •

Supply side issues (2/2) Design difficulties

Supply side Need for low Premiums

High Default

Operational bottlenecks High risk to health

Health infrastructure

Sales network creation

Premium collection

Documentation

Very high operational cost due to poor infrastructure and communication networks

“Our biggest operational challenge is being able to touch base with people and collect money quickly” - Sakshi Chaddha, Employee, Microsave Healthcare infrastructure

Potential solutions Leverage existing networks and upcoming government infrastructure

• Most rural areas have a weak hospital network • Many of the hospitals don’t have infrastructure and manpower to treat all illnesses • Villagers may have to travel to hospitals in cities for certain procedures

Sales Network creation • Limited infrastructure • Limited understanding of local market dynamics • Limited social equity with people • Limited sensitisation and training of potential sales force in understanding the rural consumer

Premium collection • Underpenetration of rural banking institutions – low savings account linked premium collection • High tendency of delay or default of premium from certain members • Physical collection a challenge in absence of informal networks

Documentation • Lack of availability of documentation to enroll in a scheme • Most rural people don’t always have the requisite documents for successful claim settlement • They don’t understand the scope of documents and riders at point of claim

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy • Conclusion •

From issues to success strategy Issues identified

Success strategy

Potential solutions Takeaway

Affordability, Trust, Simplicity, Efficiency have to be the core value proposition that drive success in rural insurance

Supply side

Demand side

Operational bottlenecks

Ability to buy

Willingness to buy

Affordability

Trust

Simplified offering

Operational efficiency

Reduce premiums

Insurance education

Simple procedure

Use existing networks

Frequent gratification

Health risk education

Minimum T&C

Selective rollout

Alternate payment modes

Renewal benefits

Simplify paperwork

Show probability of occurrence

Design difficulties

Implementing strategy to enable Rise

Product Design

Network partners

Communicate

Claim settlement

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Conclusion

Product Design (1/3) Reduce Premiums

+

Simple products

+

Frequent gratification

+

Premium flexibility

=

Final Product

Premiums : Issue at hand

Cannot pay high premiums

Insurance company

Consumer

Low premiums not feasible

Who should pay premiums? Those who benefit from insured’s good health Who benefits from consumers good health

Lenders Payment ecosystem Lenders Consumer Healthcare widened Consumer Banks providers MFIs Premium Partners payable by Partners consumer will Healthcare Organizations they supply to reduce providers Organizations that supply to them

areIndia : fordoesn’t • Partners Critical reason loan defaults is health ~30% rural visit hospitals 1.costs Those who supply to consumers due to high medical expenses (FMCG, telecom etc.)the user • Financial shocks lead into debtof Health Insurance increases occupancy Insurance 1.traps, Thoseleading whom consumers to default supply to healthcare providers company (ITC, PepsiCo etc.) • Health insurance mitigates against health Results in increased incomes for hospitals •• shocks Good health leads to stability of supply Insured patients provide higher revenue and income • Lenders’ risk reduces if consumer has a reliability • health Contribution to healthcare of rural insurance Level of benefit : HIGH people adds to the brand image/CSR Level of benefit : MODERATE Level of benefit: MODERATE Beneficiaries should contribute to premiums. How?

Healthcare providers

Lenders

Partners

Discounted services Easier to give out Directly linked to their benefit

Reduce operational costs Provide network/infra Low marginal cost

Direct cash contribution Most feasible form Adds to CSR brand

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Conclusion

Product Design (2/3) Reduce Premiums

Simple products

+

+

Frequent gratification

+

Premium flexibility

What health insurance covers

Standard health expenditure Cost Surgery Inpatient

Hospitalization Diagnostics Outpatient

OPD Consultation

“Making products simple to them and showing them tangible benefits is crucial for them to trust you Terms an d conditions about coverage and costs will deter them from renewing” -Mr. Kartik Mehta, Founder and CEO, Pahal Finance,

Final Product

Illnesses : Frequency vs. criticality

High cost. Covered by most health insurance plans

Cancer, heart attack

High frequency. Cumulative costs high for consumers

Common cold, Gastroenteritis Incident Criticality frequency of illness

Frequency of occurrence

Expert speak

=

Issues • People have multiple bad days and so they don’t see the value in saving for one very bad day • The complexity of terms and conditions is hard to understand • They relate to ‘beemari’ and ‘hospitalization’, not to specific diseases, inpatient, outpatient etc.

The product has to be in terms that they understand Need to minimize caveats which are • Illness specific • Procedure specific

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Conclusion

Product Design (3/3) Reduce Premiums

A product which adds premium contributors, simplifies coverage while protecting from health shocks

+

Frequent gratification

+

Premium flexibility

=

Final Product

Scheme 1: Low premium; Only high risk cover

Scheme 2: Higher premium; Full risk cover

Target: Low income; Low paying capability

Target: Higher income; Higher paying capability

Premium

Contributors

Premium

Contributors

~Rs. 30-50 per month ~Rs. 8-13 per week

Direct: Insured, Partner Indirect: Hospital, Lender

~Rs. 90-120 per month ~Rs. 23-30 per week

Direct: Insured, Partner Indirect: Hospital, Lender

Cash, Savings linked or kind

Cover

Cash, Savings linked or kind

Cover

Service type

Outpatient

Hospitalization, Surgery

Out of pocket

OPD consultation, diagnostics

Covered by insurance

~Rs 1500-2500 Price floor

Service type

Outpatient

Partial cover: ~30%

OPD consultation, diagnostics

Inpatient

Takeaway

Simple products

+

Inpatient Hospitalization, Surgery Cost

Salient features • Insurance ONLY for • Cashless cover • Tangible benefit to empanelled hospitals everyone • Partial cover : Partial • All diseases and • Scheme rollout only in amount paid by the ailments to be areas with empanelled hospital (indirect premium covered. hospitals contribution)

Partial cover: ~40%

Covered by insurance No price floor

Cost

Risks & Mitigations Moral hazard: Scheme design : Small expenses paid out of pocket Adverse selection: Sales network and reach Fraud: In-house doctors to validate claims

Implementing strategy to enable Rise

Product Design • 2 proposed schemes at low premiums • Simple products encompassing most health issues • Frequent gratification • Flexible payments

Network partners

Communicate

Claim settlement

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• •

• • •

•

Product design Network partners •

Service provider

•

Sales and distribution

Communication Claim settlement Roll-out strategy

Conclusion Takeaway Exclusive tie-ups with existing RSBY empanelled hospital’s to effectively roll-out scheme

Network: Service Provider Key requirements from service provider

Scope Infrastructure Suitable location

• Ability to cater to majority health concerns and different diseases • Meets health demand of all ages • Presence of doctors, nurses, diagnostic and surgical facilities • Capacity and adequate space • In close proximity of village targeted for insurance • Easily accessible for insured

Potential service provider RSBY empanelled hospitals •

• •

Total of 530 hospitals have been empanelled under RSBY scheme launched by GoI These hospitals have all required medical facilities and infrastructure to meet demands of people in the district Certain empanelment criteria need to be met for a hospital to be certified as “RSBY empanelled”

Use RSBY empanelled hospitals as service provider partners

RSBY empanelled hospitals are certified on availability of basic amenities and provide cash-less insurance facility ONLY for BPL citizens protected under the RSBY scheme Our strategy for service providers

Choose product roll-out location based on availability of RSBY empanelled hospitals.

Tie-up with RSBY empanelled hospitals as exclusive service providers for above BPL users Follow spread of RSBY empanelled hospitals into new districts and slowly achieve pan-India coverage RSBY Dual role empanelled

Serves as service provider for BPL scheme – GoI RSBY Serves as service provider for M&M non-BPL scheme

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• •

• • •

•

Product design Network partners •

Service provider

•

Sales and distribution

Communication Claim settlement Roll-out strategy

Network: Sales & distribution (1/2) Key requisites from sales network

Reach Infrastructure Trust

Leverage familiarity, equity and existing networks of Banks/ MFIs, Co-operatives, M&M dealerships or NGOs to extend sales network

• Established network partner with high credibility • Minimize fraud/corruption

M&M branch /dealership

Banks/MFIs

Co-operatives

NGOs

Analyse potential partner relationships

Conclusion Takeaway

• Targeted access to large groups • Understanding of customer base • Monitor, evaluate pdt. adoption • Presence of physical infra. across locations to enable sales, issue resolution, claim settlement

Potential sales partners satisfying key requisites

M&M branch/ Co-operatives dealership

NGOs Banks/MFIs

What do we gain ?

What do they gain ?

Role

• • • • • •

Existing infrastructure Access to large groups Know-how of local people Possibility of saving linked plans Existing sales network Easy premium collection, Access to financially stableclaim people settlement branch People whothrough trust and value location Customersbrand exposed to finance Mahindra

• Reduction of risk related to health for consumers of MFIs leading toservices default in loans financial Savings linked deposits cost • Possibility of exploiting • synergies Intimate new account creation Enhances trust faith in MFI • Opportunity to and cross-sell

• Sales team representative stationed at MFI network physical locations of M&M network • One stop shop for issue resolution, doubt clearing, claim settlement MFIs toto • Leverage mobile network of M&M maximize reach across village

• • • • •

Highlycredibility trusted by local people High with local people large groups Access to groups of people who’re Possibility of kind linked plans open to accepting new ideas Easy premium collection, claim Understanding of local people settlement through officeclaim location Easy premium collection, settlement through office location

of risk related to for • Reduction Seen as promoting welfare health for members the village • Seen as promoting for Addition of service welfare in current the village portfolio • Kind linked payments may incentivise more associations

co• Sales team will co-ordinate with NGO operative headbusiness for daily needs head for daily • Premium collections made easier via co-opNGO office local office co-opand andinstant • Intervention through NGO instant sign-ups co-op gatherings sign-ups in NGO in gatherings

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• •

• • •

•

Product design Network partners •

Service provider

•

Sales and distribution

Communication Claim settlement Roll-out strategy

Conclusion

Network: Sales & distribution (2/2) Choice of network partner by geography • Scheme roll-outs in different geographies could involve varying degrees of partnership with different sales partner basis • Relative reach of each sales partner • Relative strength of sales network • Local dynamics and preferences • Equity of sales partner in specific area

Referral program to maximize mass reach • Referral programs in the rural setting can bring learning from other industry to maximize reach to the masses • Given the trust barrier, word of mouth and coercion from known people would be effective

Realm of trust Early adopter refers 5 people

Case in point: Gujarat Milk production and pasteurization is the mainstay of the Gujarat economy with production at 270lakh kg per day. GCMMF is the country’s largest milk coopertive with a strong established network across Gujarat

Takeaway Maximize reach to masses and overcome trust barrier through a strong referral program

Sales strategy for Gujarat Reach Network Equity Ease

• Partner with GCMMF • Establish sales kiosks at GCMMF outlets • Leverage GCMMF mobile network to maximize reach • Leverage GCMMF equity

Referred 5 buy insurance

Successful referral benefit

1 month premium discounted You pay 11 months, we pay 12th

Implementing strategy to enable Rise

Product Design

Network partners

• 2 proposed schemes at low premiums • Simple products encompassing most health issues • Frequent gratification • Flexible payments

• Service provider: RSBY empanelled hospitals • Sales network: partner MFIs/Coops/M&M dealer • Referrals scheme

Communication

Claim settlement

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Conclusion

Communication strategy Potential solutions: Effective communication on Category creation

Insurance, health, risk

Initiate communication targeted at creating product category, followed by building product affinity and finally, consumer loyalty

Risk education Insurance education

Product acceptance

Product concept & associated benefits

Product introduction

Product adoption

Payment terms, cover, claim settlement

Product logistics

Loyalty

Renewals, relationship building

Renewals

Phase 1

Takeaway

Future value & health expense

Communication plan

Phase 2

Phase 3

Risk education

Insurance edu.

Product intro.

Prod. logistics

Renewals

• Potential health risks for family • Understand potential costs of health issues • Past experience of local villagers with health risk and its impact

• Clarity about concept of insurance • Benefits of insurance • Need and relevance of insurance • Future value

• Proposed product details • Explain benefits from product • Usage details of product • Premiums payable • Inclusions

• Payment terms • Max. cover • Claim settlement • Terms & conditions • Documentation

• Push to renew • Incentives • Remind of product benefits • Build long-term relationships • Extend policy base across family

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Category creation: Risk and insurance education Phase 1 : Category creation

Objective : • Attract attention of potential customer base • Explain “risk and insurance” concept • Prepare base to explain insurance product to interested customers

Reach

Actionables

Message

Organize: • Health camps/melas • Short movies/ documentaries • Street plays • Speeches The above will help create preliminary interest amongst potential consumer to further inquire about possible ways to insure against risks

Basic Health awareness, sanitation

Conclusion Panchayats

MFIs

Target people through local institutional groups Cooperatives

SHGs

Potential health risks Implications of health hazard – SHGs debt trap Local cases to demonstrate how health concerns pushed to poverty trap Concept of insurance to mitigate such risk

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Product adoption: Scheme and logistics education Phase 2: Product acceptance & adoption

Objective : • Introduce product to targeted groups of early adopters • Explain and educate on functional benefits of product • Explain product logistics and usage details • Incentivize referrals and word of mouth spread

Actionables

Reach

Conclusion

Communication barriers: 1.Trust deficit 2.Inertia of ignorance 3.Simplicity

Panchaayats MFIs

Hospitals

Explain product to interested people and make direct sales pitch

Kiosks

SHGs

Cooperatives MIBL representatives at all channel partners engage with interested customers and sell products

• Group sales through panchayat, SHGs, MFIs • Identify opinion leaders early adopters, push to buy through direct sales • Use early adopters to spread msg. of product • Referral scheme to incentivize favorable word of moth

Leverage local people and word of mouth to increase trust element Engage repeatedly via sales team at channel partner locations Convert opinion leaders into initial consumers Clarify doubts and questions, minimize information

Message

What is the product ? How does it work ? Benefits from product usage Premiums payable and inclusions of product Demonstrate product logistics – claims and settlement, cover and required documentation Local people using & recommending product

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Loyalty creation: Push to renew scheme Phase 3 : Loyalty

Objective : • Reinforce benefits of health insurance to existing policy holders • Provide incentives to renew policy • Establish long term relationship with customers

Barriers 1. Undermine relevance as they never claimed during last policy tenure 2. Inertia to reinitiate premium payment cycle due to low liquidity

Reach

Actionables

Existing policy holders

• Compile and distribute a brochure containing details of 5 major policy beneficiaries in village • Radio ads – beneficiaries sharing experience • Poster/banners/ word of mouth communicating incentives on renewal of policy

Reinforce importance Incentives to renew policy

Message

Conclusion

Reach by multiple channels (especially policy holders who never claimed in policy span)

Remind customers how covillagers have benefitted from health insurance Long term benefits of health insurance

free health check-up available to head of family on policy renewal

Implementing strategy to enable Rise

Product Design

Network partners

• 2 proposed schemes at low premiums • Simple products encompassing most health issues • Frequent gratification • Flexible payments

• Service provider: RSBY empanelled hospitals • Sales network: partner MFIs/Coops/M&M dealer • Referrals scheme

Communicate

• Category creation • Product acceptance and adoption • Loyalty creation and relationship building

Claim settlement

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Claim settlement Role of broker in claim settlement

Towards insurer

Supporting the insurer’s profit goal and avoid paying for fraudulent claims

Towards insured

Complying with the contractual promises in the policy and ensure realisation of adequate claims

Implications of failure to settle valid claims Insured loses faith in insurance policy and company No renewal of policy and further loss of customer base with spread of information Empanelled hospital loses business and in long run mite cause discontinuation of partnership

Proposed claim settlement procedure

Conclusion Hospital informs MIBL representative

Sales representative from MIBL assesses and claim

• The empanelled hospital -responsible to initiate claim by informing MIBL representative • Hospitals have incentive to inform MIBL to realize their cash claims

• Check for necessary bills and receipts for validity of hospitalization • Verify with the rate sheet of hospital • MIBL rep. should regularly update rate sheet with

Claims not verified • For any discrepancy or fraud the MIBL mite not verify the claims • The insured should be informed clearly of the reasons for the same

Claim verified : Transfer of requisite amount to hospital • The claim amount is directly transferred to hospitals account • Complete cashless insurance is easy to implement for people without a bank account .

Implementing strategy to enable Rise

Roll-out strategy

Product Design

Network partners

• 2 proposed schemes at low premiums • Simple products encompassing most health issues • Frequent gratification • Flexible payments

• Service provider: RSBY empanelled hospitals • Sales network: partner MFIs/Coops/M&M dealer • Referrals scheme

Communicate

• Category creation • Product acceptance and adoption • Loyalty creation and relationship building

Claim settlement

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy •

• • • • •

•

Product design Network partners Communication Claim settlement Roll-out strategy

Roll-out strategy Identify areas with unmet demand • Areas without insurance coverage • Affordability of insurance premium

Week 1

Analyze demographics & scheme feasibility • Income levels • Education • Financial inclusion

Week 2

Week 3

Check availability of healthcare infrastructure

Check availability of sales channels/ networks

• Existence of RSBY empanelled hospitals • Possibility of tie-up with RSBY hospitals

Week 4

Week 5

• Reach and scope of potential channel partners • Feasibility of partnerships

Week 6

Week 7

Execution

• Communication • Direct sales • Claim settlement

Week 8

Week 9

Identify areas with unmet demand

Conclusion

Analyze demographics & scheme feasibility Check availability of healthcare infrastructure

Tie-ups with healthcare providers Tie-ups with sales channel partners

Check availability of sales channels/ networks

Week 10

Week 11

Week 12

Week 13

Week 14

Week 15

Week 16

Week 17

Week 18

Execution Risk & Insurance education Product & logistics education Initiate targeted direct sales

Set up kiosks and channel sales teams

Relationship building Referrals Communication Sales

Case approach • Insurance Industry analysis • Rural India understanding • Issue identification • Strategy overview • Implementing strategy • Conclusion •

Conclusion Actionable

Product design

Challenges

• It may be difficult to convince hospitals to give cash discounts as they may not see tangible benefits from increased occupancy

Way forward

Network partners

• The non hospital network partners may not perceive value in MIBL’s proposition and hence a hinderance to execute the plan

Communication

Claim settlement

• Many BTL campaigns and detailed personal interactions with customers may increase operational costs and stress margins

• To have cashless treatment for emergencies, all hospitals may not be comfortable with accepting delays in payments

These are genuine issues and can only be overcome with the experience of a successful pilot. Once the scheme is rolled out in one district and the benefits are documented, we can then use our reach and networks to trigger a domino effect across various geographies. The first push will however have to come from the empirical data and the willingness of a health service provider to join hands to enable RISE.

Thank you