The value Bima Vahak initiative can add to rural society

Nitin Mehta

India is the most populous country, home to ~1.4 billion people with ~48 per cent female population. Compared to a population growth rate of less than 1 per cent for the overall Indian population, the female population is growing by a 1.76 per cent annual average growth rate.

Spread over 28 states and 7 Union Territories, it’s also the seventh largest country with a rich and diverse culture, heritage, and way of life, which contribute to the country’s growth. Projected to grow to a ~3.7 trillion economy in FY24, continuing at the current projected growth rate of ~7.2 per cent, India may become a ~4 trillion economy in FY25.

This puts India in a peculiar conundrum, especially with its aspiration to become a 5 trillion economy in the next three years. The high potential intersectionality of rural/urban, female/male population, and their participation in the labour force and economy, thus becomes a key pillar and an added engine in this aspiration. As per the report titled “Innovation in India’s rural economy” by Bain & co, ~68 per cent of the total labor force participating in the Indian economy is from the rural parts of the country. While this number is commendable, it’s also important to note that 65 per cent of the country’s population still lives in rural areas. With the massive drive for urbanization, there is a mismatch between the available capacity and how it is being used.

Upon further breakdown of this, we see the significant gap in women’s participation and subsequently contribution to the GDP, which is currently at 18 per cent. This contribution is mainly from unorganized sector, which employs ~80 per cent of the women workers.

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Decreasing rural jobs and massive focus on urbanization have severely hampered the accessibility to the urban organized job market for women due to the limited availability of organizations and jobs in their locality and the lack of safe and easy access to the urban job markets, coupled with the slow transition in terms of skilling, enabling with tools, and creating an inclusive and conducive work environment.

Bridging this gap in participation by offering inclusive, innovative, accessible jobs, tools, and markets is the key to unlocking what may be called the next big liberalization. This will enable India with an additional 1.5 per cent growth to its GDP while also aiding to a more equitable, progressive growth for the women population of India.

Thus, the initiative to enable the participation of this intersection of rural and women workforce in the distribution of insurance is a key milestone in achieving the ‘Insurance for all by 2047’ mission 2047 and enhancing the role of the women population in our Indian workforce. A woman-centric, rural-based dedicated distribution channel will prove to be an important step towards empowering women through employment and financial freedom.

As per the Insurance Regulatory and Development Authority of India (IRDA) circular “Bima Vahak” guidelines, dated October 9, 2023, this initiative aims to identify and develop local resources, called Bima Vahaks, allowing insurers to appoint them for soliciting insurance business and facilitating policy and claim servicing.

A Bima Vahak can be an individual or a legal entity called a corporate Bima Vahak. Corporate Bima Vahaks can employ individuals to solicit insurance for them and their partnered companies.

While further operational details await regulatory release, the current guidelines suggest a promising initiative for insurers and the insurable population.

  • The insurance authority will introduce a comprehensive insurance product called “Bima Vistaar,” offering a one-stop solution for all life and general insurance needs.
  • Bima Vahaks will be empowered with physical and electronic ID cards, handheld electronic communication devices for end-to-end policy activities, and adequate development opportunities.
  • In due course, the Life and General Insurance Council will establish standard operating procedures for Bima Vahak selection, training, engagement, and operation, creating a structured and large-scale distribution channel.

Lack of awareness, product complexity, limited availability of standard products, and pricing contribute to India’s relatively low insurance penetration of ~4 per cent of its GDP. Insurance distribution has always been the Achilles’ heel in addressing these challenges. Individuals who have lived in villages/Gram Panchayats will better understand the nuances of the needs and desires of a larger section of the Indian population. They are well-positioned to fulfil their counterparts’ needs, building the safety net for financial stability and security.

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The value Bima Vahak can add to rural society extends beyond just being an insurance distribution channel but also signifying the country’s commitment to its women and rural population. This initiative can help improve India’s female labour participation rate and serve as a stepping stone towards a $5 trillion economy.

Views expressed by Nitin Mehta, Chief Customer Officer & Head – Marketing, Digital & Online Sales at Bharti AXA Life Insurance.

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