The insurance industry will have to come together and campaign in a big way to create an awareness like the mutual fund industry so that the rural population, especially farmers, come forward to avail of cattle, tractor and other insurance schemes, said Rahul Mishra, Co-Founder and Director, Policy Ensure. 

“The moment the government intervened in favour of the mutual funds industry campaign, expansion took place. It created a lot of awareness. A small town like Gorakhpur in Uttar Pradesh contributes  ₹2-3 crore a month. The insurance industry has to do a similar campaign,” said the co-founder of Policy Ensure, which was launched in 2016.

Policy Ensure is a digital insurance “phygital” platform that is an insurance distributor and a licensed insurance broker catering to tier II and III cities and towns. “As people grow and spend, such a campaign will help create demand for various insurance policies,” Mishra said. 

Tractor, cattle insurance

Policy Ensure, which is present in Maharashtra- particularly Mumbai, Odisha and Jharkhand, plans to expand to central and southern parts of the country over the next 6-12 months.

The insurance distributor has a local person to distribute its policies particularly to ensure that coverages are not “missold”. These local persons or advisors sell the insurance covers with the customers, while the company works on a business-to-business basis with various insurance companies, he said. 

The company plans to have a distribution force of 50,000 to one lakh over the next 2-3 years. Policy Ensure does cattle and tractor insurance for farmers, though it is dependent on the insurance companies. 

“A lot of catching up is needed on the cattle insurance front. It is not happening at the scale it should,” Mishra said. 

Tagging an issue

Only rich farmers insure their belongings. “Small and marginal farmers do not have the money to insure their cattle or other belongings,” he said. 

Tagging of cattle for insurance is another issue. Also, insurance of cattle or crops by farmers is “highly political” and politicians try to influence the decision on the payouts. 

Insurance companies themselves do not encourage covering these risks, though they can be covered and problems settled without any issues using technology such as drones. “Also, today there are not enough veterinarians available to tend to the animals in the case of cattle insurance,” he said. 

The focus of Policy Ensure is on renewal of insurance, particularly for tractors and farmers’ two-wheelers. “We encourage the farmers to at least renew the insurance once. On our part, we tell people whoever we come across in rural areas that insurance is not an expenditure but securing oneself,” the company’s co-founder said. 

One simple solution to ensure that farmers insure their belongings is to create an ecosystem bringing insurance tech firms, agtech and micro-tech players, and microfinance companies together. 

Embedded insurance

“Microfinance companies can evaluate the farmers’ risk and finance the premium for the policy to be issued. The sum paid could be recovered slowly through installments or other ways,” Mishra said.

Insurance can also be embedded for farmers like if they buy a bag of urea they could get insurance for, say ₹500 with the premium of ₹200 being included in payment for fertilizer, he said. 

At least 80 per cent of Policy Ensure’s business comes from rural areas with tier-2 and 3 cities and towns accounting for 70-80 per cent of it. 

Mishra said the contribution of rural India to insurance premium is set for rapid growth with the improvement in connectivity, roadways and infrastructure.

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