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Leveraging technology-enabled banking agent distribution networks -- FINO Fintech Foundation

About the Project

 
Project Name: Leveraging technology-enabled banking agent distribution networks -- FINO Fintech Foundation
Type of Facility Project: Microinsurance innovation grantee
Country of Operation: India
Region: Asia and the Pacific
Sub Topics: Business models, Other channels, Client interface, Claims, Enrollment, Sales, Product development, Retailers, Mobile network operators, Partnerships, Improving value, Demand, Health
Type of Risk Carrier: Regulated insurance company
 

Organizational Overview

FINO (Financial Inclusion Network & Operations Pvt. Ltd) provides a complete electronic banking technology payment platform for low-income customers combined with an extensive services delivery channel. Founded with the primary objective of building technologies to enable financial institutions to serve the underserved and unbanked market, FINO develops financial services delivery systems to enable financial institutions to lower transactions costs, increase their outreach and bring more transparency to their business. FINO Fintech Foundation is the business correspondent arm of FINO. It acts as an intermediary in providing financial and banking serviceswith the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector. In five years, with over 38 million customers and 20,000 transaction points in 386 districts across 26 states, FINO is the market leader in delivering products and services to serve low-income customers and enable doorstep banking.

 

Project Description

Poor financial literacy, lack of infrastructure and distribution channels, low business volumes and the availability of only few low-cost products have challenged the provision of microinsurance services to low-income households in rural parts of India. This project has sought to overcome these challenges by taking the following actions: The large existing network of banking correspondents has been used as a distribution channel, contributing to decreased distribution costs for the insurer...READ MORE
 

Beneficiaries

The target market comprises of No Frills Savings Account (NFSA) holders who have recently been introduced to financial services. They are largely agricultural cultivators, labourers or small landholders with income in the range of INR 5,000 to 9,000 (USD 100 to 180) per household per month. The income is seasonal in nature and influenced by weather factors such as drought, floods and rainfall, and crop failures due to pests. Apart from agriculture, other occupations held are fishing, farming, cottage industry, pottery, carpentry and small businesses.

Education and use of formal financial services is low in this market segment.

 

Learning Agenda

The following are the questions that the project seeks to address:

  • What process changes need to occur to sell insurance through the business correspondent channel?
  • Are business correspondents acceptable by low-income customers as insurance agents?
  • Is it financially sustainable for business correspondents to cross-sell microinsurance to NFSA customers?
  • How do insurer’s costs per customer compare between business correspondents as distributors vs. direct sales agents?
  • How effective is mobile phone technology in providing training to a remote and "non-insurance" sales force?
  • What role can technology play in the sales and fulfilment of telemedicine services?
  • How acceptable are hospital cash and telemedicine services amongst low-income households (related to willingness to pay for a health consultation)?
  • Does telemedicine improve take up and renewals, and help in reducing costs of a health insurance programme?

Project Status

Key Performance Indicators

Product details:

Details

ILO HospiCash 260

HospiCash 350

ILO MD HospiCash 400

Premium (Rs)

260/-

350/-

400/-

Age Band

18 to 60 years

18 to 60 years

18 to 60 years

Validity

One Year/365 Days

One Year/365 Days

One Year/365 Days

Sum Assured -Accidental Death Benefit

100,000/-

100,000/-

100,000/-

Sum Assured -Permanent/Partial Disability Benefit

 100,000/-*

100,000/-*

100,000/-*

Hospital Cash Benefit

Rs 750 for 7 Days and deduction of 1 day

Rs 750 for 10 Days and deduction of 1 day

Rs 750 for 7 Days and deduction of 1 day

Other Benefits

NA

NA

Unlimited call to a qualified Doctor for medical consultation.

Incentive – Bandhu

Rs 25

Rs 25

Rs 40

Incentive –BC

Rs 2

Rs 2

Rs 4

Incentive-DC

Rs 3

Rs 3

Rs 1

* also see table of benefits for disability cover below

Table of benefits for disability cover

The disablement

Compensation Expressed as a Percentage of Total Sum Insured

1) Permanent total disablement

100%

2) Permanent total loss of two limbs

100%

3) Permanent total loss of sight in both eyes

100%

4) Permanent total loss of sight in both eyes

100%

5) Permanent total loss of sight of one eye and one limb

100%

6) Permanent total loss of speech

100%

7) Complete removal of the lower jaw

100%

8) Permanent total loss of mastication

100%

9) Permanent Total Loss of the central nervous system or the thorax and all abdominal organs resulting in the complete inability to engage in any job and the inability to carry out daily activities essential to life without full time assistance

100%

10) Permanent total loss of hearing in both ears

75%

11) Permanent total loss of one limb

50%

12) Permanent total loss of sight of one eye

50%

Sales financial year 2012-2013

Location

HospiCash 260

HospiCash 350

Total

Jaunpur

150

 

150

Chandauli

105

 

105

Jalgaon

 

140

140

Mau

 

42

42

Varanasi

 

138

138

Total

255

320

575

Sales financial year 2013-2014

Location

HospiCash 260

HospiCash 350

MD HospiCash 400

Total

Jaunpur

283

 

1

284

Mau

131

 

1

132

Chandauli

126

 

 

126

Sangli

79

 

3

82

Kolhapur

55

3

 

58

Mumbai Suburban

27

 

 

27

Satara

11

 

 

11

Yavatmal

6

 

6

12

Varanasi

1

22

 

23

Total

719

25

11

755

 
 
Project Updates
Phase 1 - September 2011 to February 2012 A feasibility study was carried out by mHealth to analyze the interest of FINO’s clients in telemedicine and their willingness to pay for insurance. The findings highlight that clients are unwilling to pay more than Rs 500 for insurance. Among the surveyed, 27 per cent consider a premium of up to Rs 250 as appropriate and 39 per cent said that they are willing to pay between Rs 251 and 500. Premiums in excess of Rs 500 were only accepted by a minori...READ MORE

Project Lessons

On product development Gathering feedback from various stakeholders provides valuable input for product design. Taking into account the opinions of clients, hospitals and other stakeholders has enabled the project to improve client value being offered. Initially, a market analysis survey was conducted, which also included questions about the clients’ willingness to pay for insurance. The findings highlighted that clients would be unwilling to pay...READ MORE
 
 
On distribution Using role plays during training sessions for sales agents helps identify misunderstandings of sales agents. The training modules required banking correspondents to take part in role plays to demonstrate their adequate understanding of the product and processes. These role plays demonstrated that agents tended to sell insurance as an investment rather than a security net. Given these findings, training modules and marketing material...READ MORE
 
 
On technology Mobile technology based training is beneficial but not sufficient on its own. Mobile technology can facilitate cost-effective training. Designing and implementing mobile training modules has indeed helped FINO educate its sales agents about the product and processes. However, the feedback of banking correspondents highlighted that physical training is still required in order to help sales agents grasp the concept of insurance. Thus, F...READ MORE
 
 
Project page contributor/s:  Tobias Hoffarth and Pranav Prashad (The Facility)
 
 
Date of last update:  March 2015