New markets – microinsurance in India

Microinsurance has come a long way in recent years, helping to improve the lives of many millions of people around the world. Our India-based joint venture HDFC ERGO, which has been developing and selling insurance products for rural contexts since 2008, offers a diverse range of microinsurance solutions such as health, accident, fire insurance or specific cover for livestock and equipment essential to people’s livelihoods.

ERGO uses special solutions to contribute to building up insurance markets in developing countries and emerging economies with the focus on long-term growth perspectives. One example of such a market is India, where the overwhelming majority of the population has no access to traditional insurance products. Our German-Indian joint-venture company HDFC ERGO develops microinsurance policies in close cooperation with non-governmental organisations and microfinance institutes. The key factor for the products is that they must have a transparent structure, need to be marketed at an affordable rate, and can be sold through innovative sales channels.

In the province of Uttar Pradesh, for example, sales outlets have been set up in some 50 rural supermarkets. The policies range from health insurance, through accident and property cover, to protection against the loss of working animals, and failed harvests. Moreover, HDFC ERGO has joined forces with the Biocon Foundation to offer a health insurance which provides cover for hospital stays, medical treatment and operations in return for a very low premium. A registration system based on the use of mobile phones permits the simple and paperless conclusion of insurance contracts.

On behalf of the Indian government, HDFC ERGO was the first private insurance company to launch a weather insurance policy for failed harvests on the market in 2010. Small farmers are now able to take out this insurance policy in 14 out of 28 states in India. The structure of this product is simple and a flat-rate payment is made to reduce the financial risks of failed harvests if a specified temperature or level of precipitation is exceeded or not achieved.