The Hindu : Business : Use post office network to market insurance products

Online edition of India's National Newspaper
Thursday, Nov 15, 2007
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Use post office network to market insurance products — Chidambaram

Special Correspondent

Simple understandable products for the poor needed

— PHOTO: PAUL NORONHA

USER-FRIENDLY: Union Finance Minister P. Chidambaram (left), with the Chairman of IRDA C. S. Rao at a conference in Mumbai on Wednesday.

MUMBAI: Union Finance Minister P. Chidambaram on Wednesday asked insurance companies to use India’s strong and widespread post office network and bank branches to distribute micro-insurance to the poor.

“We have a strong banking network in India with around 50,000 branches and a widespread network of post offices. I ask the insurance companies to distribute micro-insurance products through post offices, which would also bring down the transaction cost,” Mr. Chidambaram said, while inaugurating the Microinsurance Conference 2007, organised by the Insurance Regulatory and Development Authority (IRDA), India and Munich Re Foundation, here. He said the forces that driving micro-insurance products in India today were NGOs and micro-finance institutions (MFIs).

“We expect a growth rate close to 9 per cent in this current year. But the poor should get credit and insurance and they should also benefit from the product. The model should be based on trust. In many cases most vulnerable sections of society are prompt in paying back their loans. The poor are willing to discharge their obligation,” Mr. Chidambaram said.

For micro-insurance, “the model I believe work in this country is group insurance,” said Mr. Chidambaram, adding that “group members could support and encourage each other.” Further, he said that in a country like India, composite insurance products were needed for the poor, which would insure their life and assets. Mr. Chidambaram also said that the IRDA had given lot of importance to rural sector obligations of the insurance companies. But he added, “We need simple, understandable products for them.”

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