Insurance News

Insurers keen on more tie-ups with MFIs for rural penetration


With the Insurance Regulatory and Development Authority of India (Irdai) increasing the maximum number of tie-ups for corporate agents and insurance marketing firms, insurance companies are approaching microfinance institutions for partnerships to leverage their last-mile connectivity for deeper penetration into the rural market.

Sector regulator Irdai on November 25, 2022 approved major changes in various regulations, including raising the maximum limit of tie-ups for corporate agents with insurers from three for each category of insurance – general, life and health – to nine for each category. It also permitted the maximum number of tie-ups for insurance marketing firms to six from two in each line of business. These amendments are aimed at enabling policyholders to have wider choice and access to insurance through various distribution channels, and facilitate the reach of insurance to the last mile.

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“Insurers are looking at more partnerships with MFIs (microfinance institutions) since this will enable them to reach out to customers at remote places where there is an untapped demand for financial products and innovative insurance solutions,” Aditya Birla Health Insurance CEO Mayank Bathwal told FE. Aditya Birla Health is already present in this segment through MFI partnerships, covering more than 10 million lives, he said.

“Customers now are more aware about their health and fitness. For a company like us, whose main focus is on promoting the concept of healthy living through its integrated health insurance, such tie-ups will enable us to empower individuals to opt for innovative health insurance solutions,” Bathwal said.

Insurers are now more interested in forging tie-ups with MFIs, said Kuldip Maity, MD & CEO of VFS Capital, a Kolkata-based MFI. “More insurers are approaching us for tie-ups as corporate agents for selling their products to our customers. It should be a win-win situation for MFIs, insurance companies and our customers. Through these tie-ups, insurers will be able to leverage our close customer connection with last-mile connectivity, while we will get commission fees. Moreover, our customers will have a wider choice of insurance products.”

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Technological innovation would be the key to leverage the distribution network and reach out to the vast customer base, Bathwal said. According to him, innovations should focus on providing a seamless customer experience with the aim of delivering uninterrupted insurance services digitally. Insurers, particularly on the health side, should look at tech solutions that would provide a quick resolution to their queries from anywhere and at any point of time,” he said.

According to Manoj Kumar Nambiar, MD at Arohan Financial Services, MFIs will now have greater scope to offer different need-based insurance products. “It is not logical for an MFI to tie up with multiple insurers for same kind of products. MFIs will be looking to tie up with different insurance companies for different products… We are not specialised in insurance business, we are specialised in microcredit. Thus, we will be looking to offer insurance covers to our customers which protect them from unforeseen occurrences. This, in turn, will protect our core business,” Nambiar told FE.





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