With the margins from sale of unit linked insurance products (ULIP) shrinking after the recent guidelines by the Insurance Regulatory and Development Authority (IRDA), insurance companies might look at micro insurance as a potential area for growth.
Though the premium from micro insurance segment is low, the volumes could be huge as the market is still largely untapped, according to Dr Amarnath Ananthanarayanan, Chief Executive Officer and Managing Director, Bharti AXA General Insurance.
“Micro insurance will be a key area of focus as margins from ULIP is coming down. Eight per cent of our company's total premium comes from the micro insurance segment and we aim to take it to 20 per cent by 2012,” Mr Ananthanarayanan told a press conference here to announce the launch of operations of Anjali Microfinance in the eastern region.
The MFI has tied up with Bharti AXA and Aviva Life Insurance for providing micro insurance services in the rural and semi-urban areas.
Margins
Talking about the margins from the micro insurance segment, he said, “Margin is a function of distribution costs and claims ratio.
“Most of our micro insurance is sold through government schemes, MFIs, SHGs and NGOs.
“If we can manage the operation costs properly then we can achieve good margins in the sector.”
The tie-up with Anjali Microfinance will enable Bharti AXA to reach about 20 lakh individuals in underserved rural and semi-urban markets in the eastern region, he pointed out.
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