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Micro Insurance India Microinsurance Products

22 September, 2008

MICROCAPITAL STORY: Commercial Insurance Companies Partner, including TATA AIG Life and Royal Sundaram, with Microfinance Institutions (MFIs) such as SKS India and Basix to Provide Microinsurance to the Rural Poor in India.

The Economic Times recently reported on the growing trend of partnerships between commercial insurance companies and microfinance institutions. The insurance companies cite 'saving infrastructure costs" and "creating distribution channels" as economic motivators for working with MFIs. Companies involved in such partnerships include SKS India, Bhartiya Samruddhi Finance Limited (Basix), Royal Sundaram Alliance Insurance and TATA AIG Life.

For example, AIG TATA Life provides four difference microinsurance products, which range with benefits ranging from INR 5,000 (USD 110) to INR 50,000 (USD 1105). These products, which have premiums starting at INR 5 (USD .11), offer a variety of payments and coverage options. The Sumangal Bima Yojana, also offers a premium payback plan to combine savings and insurance services. While the company's website did not cite the specific MFIs the insurer is working with, it mentions its relationship with "NGO's (Non-governmental organisations) and Rural organizations with community level SHG (Self Help Group) women advisors" in extending these financial services. TATA AIG Life is a joint venture between the TATA Group and The American International Group (AIG). As of the last website update, the TATA Group held a 74 percent stake and AIG held the remaining 24 percent. It is unclear how AIG's current financial situation will affect the company. In the 2006-2007 fiscal year, the TATA Group had total assets of USD 25b and total revenue of almost USD 29b. As of September 18, 2008, the company had a market capitalization of USD 40.08b.