Life Insurance Corporation of India (LIC) has set an aim of selling four million policies in rural areas in the current financial year. It sold over 5 crore insurance policies last year, of which over 1.1 crore went to rural areas. LIC said that two years ago, the insurer had sold 8 lakh policies via its alliance with NGOs, micro-finance organisations, co-operative societies and rural banks. The insurance penetration in urban India is 47 per cent, while it is only 27 per cent in rural areas. The rural and informal sectors are not a homogenous category and are geographically dispersed. It has been calculated that if the cost of a policy is Rs 300-400, the distribution cost is double. A panel chaired by former LIC chairman, NM Govardhan recently suggested new sales channels for retail insurance products with adequate safeguards. Importantly, it broadened the definition of a micro-insurance agency to comprise rural kiosks and other rural distribution networks. The rural kiosk can be a revolutionary new point of service delivery. Whether a makeshift stalls, or a multipurpose store offering other services, the kiosks too are owned by entrepreneurs who need individual risk cover apart from their potential role as micro-insurance agents.
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