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Shyamal Banerjee/Mint
Shyamal Banerjee/Mint

Improving insurance penetration through common service centers

A CSC is a low-cost setup and distribution center for government institutions to deliver e-governance services to the rural population

An army of digitally trained individuals are leading a silent entrepreneurship revolution in the heart of Indian villages. Through common service centers (CSC) or Jan Seva Kendras, many young people (some even teenagers) have enrolled to become Rural Authorised Persons (RAP) to solicit business. These individuals need to undergo training and examination as specified by the Insurance Regulatory and Development Authority of India (Irdai), in the subject of insurance products and other necessary topics. The online examination for RAPs is conducted by the National Institute of Electronics and Information Technology or any other institute as approved by Itdai from time to time in their center spread across India. Through RAPs, the sale and procurement of general insurance products are extended among the vicinity of the village or town that they reside in.

But before we go into how CSCs can be used to increase insurance penetration, here is a background on the workings of a CSC.

A CSC is a low-cost setup and distribution center for government institutions to deliver e-governance services to the rural population. The CSC-SPV (special purpose vehicle) has been established by the Indian government under the National e-Governance Plan. To monitor and supervise the progression of CSC-SPVs, a State Designated Agency (SDA) acts as a nodal agency, and the Service Centre Agency (SCA) becomes the implementing agency which provides the required investment budget and the functional specification of the CSC as identified by the SDA.

Keeping in mind the eligibility norms to operate a CSC, the principal officer, a person employed by the CSC-SPV, should have a clean history without involvement in financial forgery or criminal acts, and should have the requisite qualifications and experience.

Insurance companies enter into an agreement with CSC-SPVs for distribution of its products through these centers. The timeline for such an agreement is fixed for three years. Insurance companies at their end, amalgamate their technology portals with the interface used by CSC-SPVs. A RAP within the contours of the village is authorised to solicit insurance business on completion of the necessary training and examination as specified by the authority. A RAP sells and procures general insurance products. The essential paper work and identification of the insured are seamlessly carried out at the CSC with the help of technology tools.

Premiums are collected by CSC-SPV centers in cash, which is later remitted to the insurer. The policy contract, too, is submitted to the prospect through the RAPs.

Such personal touch points through RAPs have given those in villages access to simple-to-understand products to mitigate the risk to life, motor, agriculture pump sets, personal accident insurance and farmers’ package policies. By limiting the sum insured of these products to 2 lakh (other than for motor insurance), insurers are able to extend such micro-covers and obviate the risk emerging from such groups. Further, insurers have consciously decided to keep away complex products which require specialised knowledge on premium computation for RAPs’ to solicit and service products.

The freshly-created category of over-the-counter products are not only easy to comprehend for the village-level entrepreneur, but also the right entry-level product for the rural population.

A new channel of marketing and distribution of insurance products has been created through these digitally-equipped CSCs. The might of 157,000 technology-driven access points, which is growing each day, lies in the unexplored locally available talent across age groups. Today, Anganwadi workers, young local talent and even specially-abled people have joined the CSC movement, thus improving their skill sets and possibilities of a better livelihood.

These entrepreneurs on the ground level have the power to connect with local communities, which no outsider with the strongest branding campaign can create. The prowess of understanding the needs and speaking the same dialect as the local communities are creating a win-win situation. Task of expanding rural insurance penetration would no longer need tremendous efforts in creating the on-ground infrastructure. A cost-effective and efficient network is ready to be harnessed.

By imparting knowledge and training on curbing frauds, companies can embark on such progressive initiatives to arrest future fraudulent activities. Usually, frauds such as misrepresentation of underwriting data is being passed by the RAPs to the insurance company and non-integrity of complaint handling, claim assistance and settlement is envisaged while operating from such centers. If any of the entities are found guilty of fraud, necessary termination or suspension of the CSC-SPV, and cancellation of certificate of the RAP is immediately acted upon.

Wearing the mantle of inclusive development is not the responsibility of the government alone. By handholding village-level entrepreneurs and honing the skills of rural India through the CSC movement, insurance companies can play a crucial role in improving social and financial development.

O. N. Singh, executive chairman, Universal Sompo General Insurance Co. Ltd.

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