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Rambir Singh and His Family:

Buying Insurance

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Background

The case is about Rambir Singh who has been approachedby Ratan Sharma, insurance agent to purchase aninsurance for his daughters future needs.

Rambir is in dilemma whether he should buy insurance ornot. He reviews his situation and also takes advise from histwo brothers.

The case discusses the dilemma for Ratan Sharma thatwhether he has chosen the right segment to target, giventhe situation that new competitors are entering the market.

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Characters

Rambir Singh: Trader of Agricultural commodities inRampur

Sapna Devi: Wife of Rambir Singh

Satish: Brother of Rambir Singh

Laxman: Brother of Rambir Singh

Ratan Sharma: Life Insurance Agent working with IIC.

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Profiles

Rambir Singh Satish Laxman

Age: 43 YearsMarital Status: MarriedKids: Daughter and SonFamily: Joint Family

FLC: Full NestOccupation: TraderEducation: CollegedropoutCity: RampurTraits:1.Worries about family2.Opinion Seeker3. Wife and brothersinfluence his decisions

Occupation: EngineerEducation: GraduateKids: 8 year old son

Wife: Is a school teacher

Occupation: CAWife: Training for CAKids: NoneTraits: More risk

oriented

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SEC Classification Basis

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SEC Classification

SEC system based on two variables:

Education of chief earnerNumber of consumer durables (assumed) owned by the family.

Rambir Singh Satish Laxman

Education: High schoolNumber of consumerdurables: 6

SEC: B1

Education: GraduateNumber of consumerdurables: 7

SEC: A2

Education: GraduateNumber of consumerdurables: 7

SEC: A2

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Targeting

Rampur Population: 300,000

Distribution of different SEC

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Targeting

Segment Size: A1: 0.04% or 20 Households

A2: 0.4% or 200 Households

A3: 1.3% or 650 Households

B1: 2.3% or 1150 Households B2: 3.2% or 1600 Households

Assumptions: 20% market penetration in each segment.

Market Share for IIC is 90%

Sec A1 pays twice the premium than B1 Sec A2 and A3 pays 1.5 times the premium of B1

Sec B1 and B2 pays the approx the same premium

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Targeting

Value creation:Sec A1: 20*0.2*0.9*2x = 7.2xSec A2: 200*0.2*.0.9*1.5x = 54xSec A3: 650*0.2*0.9*1.5x = 175.5xSec B1: 1150*0.2*0.9*1x = 207x

Sec B2: 1600*0.2*0.9*1x = 288x

Based on the above calculation Sec B1 (Rambir) should be targetedas sec B1 has more potential (almost 4 times) than sec A2 (Satishand Laxman).

Also people like Rambir in sec B1 are opinion leader and caninfluence other farmers belonging to sec B1 and B2 which furtherincreases the attractiveness of this segment and increases themarket size.

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Positioning

Value-priced, trustworthy, reliable, ethical and flexible insurance

options for the traders and rural community to realize their dreams ofbetter trade and agriculture, child-education and marriage, pensions inthe later parts of their lives with guaranteed returns and personaltouch.

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Products

Marriage Products

Life Insurance Products

Health Insurance Products

Education related Products

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Pricing

Value-pricing driven pricing models

Proper coverage addressing one or more insurance areas e.g. comboinsurance products

Guaranteed return schemes for rural people

Multiple payment options e.g. on preferred days of month or incash, etc.

Waivers if one fails to pay premiums for genuine reasons

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Place

Word-of-mouth should play a powerful role

Village congregations are the ideal forum to spread awareness

Getting on board the most influential villagers (such as Rambirhimself) to set examples for others to follow suit

Participation in and sponsoring of events that rural folks enjoy themost

Building a base customer support representatives to attend tocomplaints, support, etc.

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Promotion

Insurance agents could tie up with moderately educated rural folksto train them free of cost on how insurance products work, benefitsthereof, etc.

Awareness through such folks in exchange for incentives e.g.

commissions, gifts, etc. Good performers could be encouraged tobecome agents themselves

Rural melas or fairs rather than advertisements could beorganized to build product awareness

Incentive schemes for the earliest subscribers by way of reducedpremiums, etc.

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THANK YOU