IFMR Digest May 2018

ISSUE 4, May, 2018

Cover Story
Inclusive growth in Life Insurance Industry

Expert Article
Bridging the gender gap in
Financial Inclusion
Expert Article
Towards improved access to
secondary education

1 ISSUE 4, 2018

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Student Editors :
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Arjun Aathish
Designer:
Sambhav Jain
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Akshaya Guhesh
Girish Kumar
Mahesh Sharma
Nitya B
Shanya Rastogi

ISSUE 4, 2018 2

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updated with IFMR’s latest
happenings.
For more news and features visit:
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3 CONTENTS

Happenings Pg.5
News from the B-School Pg.29

Expert Article Pg.35
Bridging the gender gap in Financial Inclusion
BY DIKSHA SINGH

Expert Article
Towards improved access to secondary education
BY MEGHA PRADHAN

Cover Story Pg.39
Inclusive growth in Life Insurance Industry
BY SATHYA SAMINADAN

Student Article
Growth prospects of education finance sector in India Pg.50
BY AISHWARYA RANJAN

Student Article Pg.54
Corporate Bonds
BY SACHIDANAND THILLAI SELVAN

Food for Thought & Fun Spot Pg.59
Milestones Pg.63
Awards and Accolades

On the cover : Photo by Sharon Pittaway on Unsplash
Inside : Event photos by IFMR Photography Club

IFMR Digest

CONTENTS 4

Editor’s desk

Hello Everyone,

Growth is an innate human drive. Every human endeavour is primar-
ily focused on it. Some are visible and many are subtle, only recogniz-
able through deep understanding. While the cosmos is constant and
limitless from time immemorial, our nature is variable and limited by
our human constraints. This duality offers opportunity. We devote our
limitations to the limitless and our variations to the invariable to attain
growth. As an epitome of our growth, we present Issue 4 of IFMR
DIGEST, May 2018
We the “Editorial and Communication” team have ensured each page
sends you a fresh stream of thoughts. It would indeed nourish, polish
and garnish all your human qualities.
Happy Reading!

Issue 4, May 2018

5

HAPPENINGS 6

The Institute successfully orga- The All India Political Parties (AIP-
PM) delegates were 18 members
nized its much-proclaimed annual strong from various universities
Model United Nations. IFMR MUN from Chennai, Bangalore and Hy-
2018 had 3 committees running in derabad. The members involved
parallel. They were UNGA, AIPPM various members of BJP, INC and
and UNSC. other political parties. The topics
involved freedom of speech and ex-
The United Nations General Assem- pression, Censorship and the role of
bly at IFMR MUN, held on 27/01/18 CBFC, freedom of the press, etc.
began with the agenda of discussing
the roadmap to end the conflict in The United Nations Security Coun-
Syria and stabilization of the Middle cil (UNSC) discussed the Agenda
East. Delegates represented various that is “Right to Self-Determination
countries that were integral to the with respect To Rohingya Muslims.
topic of discussion. Countries such Countries such as the USA, South Af-
as USA, Russia, Bolivia, Singapore, rica, Pakistan, Saudi Arabia, France
Finland formed the delegation of and Iran formed the delegation of
28-member strong UNGA. 10-member strong UNSC.

Issue 4, May 2018

HAPPENINGS

HAPPENINGS

9 HAPPENINGS

Talk on Digital Marketing 3.0

“Marketing is no longer about the Mr. Rajasekar KS, GM- Marketing at Matrimony.com on
stuff that you make, but the sto- the changing digital landscape in Marketing
ries you tell”, IFMR was privileged
to have Mr. Rajasekar KS, General
Manager, Marketing at Matrimony.
com with us on 17th Feb 2018. Mr
Rajasekar shared his wisdom on
Digital marketing with the IFMR
students. He has many achieve-
ments and has been recognized by
Adobe and Paul writer as one of the
top 100 content leaders for the year
2017. Mr. Rajasekar shared various
stories and taught the students on
how the word “digital” is changing
the marketing landscape.

An Interactive session on DISC profiling for Career growth
with Mr. Ananth Palaniappan

Mr. Ananth Palaniappan, Batch 6 with Members of Alcom The Alumni committee of IFMR orga-
nized an interactive session on the topic
DISC (Decisive, Interactive, Stability and
Cautious) Profiling for Career Growth
by Mr. Ananth Palaniappan, an alumnus
from Batch 6. The event was held on 13th
February 2018 and was attended by stu-
dents from both the batches. The event
was conducted to make the students get
an insight on DISC (Decisive, Interactive,
Stability and Cautious) type of profiling,
to help them understand to which catego-
ry among DISC, they belong to and how
to deal with people from other categories.
This session helped the students know
about how to improve working relation-
ships, develop stronger sales skills, and
become more self-knowledgeable, well
rounded and effective leaders.

IFMR Digest

HAPPENINGS - ABHYUDAYA 10

Abhyudaya-2018

IFMR organised its 3 day long annual cultural and management
extravaganza - “Abhyudaya. This year theme was “Mélange -
celebrating differences”.
The events were conducted by the clubs and committees of
IFMR starting from the Finance committee’s “Battle of Banks”
and “Bourse game”, Marketing committee’s “Colporter”,HR
committee’s “Aarohan”,Operations committee’s “Battle of Axis”,
Consulting committee’s “Consigliere 2.0” and Quiz club’s “Cae-
sars’ palace”.
The events had multiple rounds starting with an online round
followed by on campus events. All the events were judged by
esteemed Alumni of IFMR from various batches. The prizes
ranged from cash amount, gift coupons and lots of fun goodies.
The flagship event of Abhyudaya was “Last Man Standing”, a
gruelling 48 hour event testing the participants’ management
skills, their smartness and their endurance.
The fun part of Abhyudaya was the music, dance and fashion
event conducted by “Raga”, the music club,”Nritya”,the dance
club and “Laasya”,the cultural committee. At last IFMRians
dance to the beats of “ Junkyard groove” and DJ Digvijay.

Issue 4, May 2018

HAPPENINGS - ABHYUDAYA

HAPPENINGS - ABHYUDAYA

HAPPENINGS - ABHYUDAYA

HAPPENINGS - ABHYUDAYA

15 HAPPENINGS
KPMG trained IFMR students on Lean Six Sigma

IFMR is proud to have partnered up with one of the Big 4
accounting firms in the world,KPMG, to organise a work-
shop on Lean Six Sigma Green Belt Training, which is con-
sidered as one of the most effective management method-
ologies to eliminate defects in any process.
The workshop was a 32 hours program held on 24th, 25th
February and 3rd, 4th March 2018. The trainer for the pro-
gram, Mr.Anirudha Chakravarty, Associate Director at
KPMG, India, has close to 16 years of experience in the
field of training and has trained over 1000 Green Belts and
150 Black Belts on Lean and Six Sigma.

IFMR Digest

HAPPENINGS 16

Womens’ day celebration

On account of International women’s can execute their plans well and where

day, Women in Business club of IFMR they lacked. The music club entertained

took a step to bring a change in lives them by their soulful performance.

of the strongest women of IFMR who Then the akkas had a fun time dancing

serves us day in and day out so that in the beats of their favorite tracks. The

we can live and study in a spotless winner team was recognized with both

clean environment - ‘the Akkas’. capital and guidance for its phenome-

nal business plan.

The aim was to make them feel that

their mind can create wonders if they

are bold enough to change.

The event was to pitch their business
plan in groups of 4 under 10,000 INR
budget.

After the event, the akkas were coun-
selled by the judges about how they

Issue 4, May 2018

17 HAPPENINGS

IFMR Digest

HAPPENINGS 18

Convocation
of Batch 17

Chief Guest Mr Seshasayee welcomed by Mr Srini Raju and Mr Ravi Sannareddy

The Institute for Financial Manage- day are very smart, very intelligent, having

ment and Research (IFMR) held the gone through this course successfully and I

Convocation-2018 at Sri City campus have no doubt that the future would be very

on April 21, 2018. Mr. R. Seshasayee, bright to all of you.

Chairman, Indus Ind Bank Limited &

IFMR was the Chief Guest and deliv- It is somewhat humbling to remember that

ered the convocation address. the DNA of human being is almost 99% the

same as the Chimpanzee. What differenti-

Excerpts from the Convocation ates therefore a human being from a Chim-

address of the Chief Guest, panzee is just about this 1% DNA. Which

Mr R Seshasayee: means that the potential that you have, not

only with a Chimpanzee, but also with Ein-

“All of you those who are passing out to- stein and Newton and Stephen Hawking is

Issue 4, May 2018





21 HAPPENINGS

perhaps matter of just a fourth decimal. This tended to enable you not to stop that learn-
means the potential exist with all of you and ing, to continuously remain curious.
it is up to all of us to figure out a way to get
the best out of each one of you. As most of you must have by now gone in to
a job, you will realize there’s lots of things
If you look back and then say what is it that that you have not been prepared for. Many
you have learnt in these two years in this in- things would look very strange to you. As
stitution and as you step in to a new career, you move in to a career, you are prepared to
it will be evident to you that what you are apply your knowledge in certain aspects of
learning is- learning to learn. Learning nev- your job. Lots of aspects of your job, you’ll
er stops. probably have to learn on the job. And that’s
when you have to honestly learn, have the
What enables you to learn is a sense of curi- curiosity to learn and have the humility to
osity that you have about the world around say “I don’t understand this. So, can I get
you. If you don’t have that curiosity, you’re to learn?”
not going to be learning. It often happens
that the spirit of curiosity is very strong I joined Ashok Leyland as an Internal Audi-
when you are young and it tapers down as tor- not a very popular profession amongst
you move forward in life. Education is in- the students who go in to career. I found

IFMR Digest

HAPPENINGS 22

Issue 4, May 2018

23 HAPPENINGS mean that you have to be necessarily be
on your own. Entrepreneurship can also
that what is happening in a truck manu- be where you are employed. If you can
facturing company was so fascinating that create new solutions, new products, new
it led me to a number of things which I services that the business can then use,
have not been prepared for in my school or you can be an intrapreneur. Creativity
college. And as it moved me through my has to get translated in terms of a tangi-
career, which moved me away from what ble impact on the society.
I had learned- which is accountancy- to
shop floor management, to many other Action is important following curiosity,
things, to marketing, to human resources creativity and change. You need to make
development- I found that this joy of learn- sure that every decision you make to solve
ing was the best reward that you could get a problem or address an opportunity, is
from pursuing a career. anchored very strongly on principles of
Ethics and of societal consciousness. “
Second important thing in carrying for-
ward curiosity is creativity. Creativity is Mr Seshasayee quoted various in-
not only about arts, but, also about ideas teresting examples from his own
and solutions which are actionable. Cre- experiences in Ashok Leyland and
ativity is also about entrepreneurship. En- other events like the falling of Bar-
trepreneurship is not just about big invest- ings Bank, success of mountain man
ments, start-ups or technology. It’s about Dashrath Manjhi, spotting of busi-
the spirit of entrepreneurship to create a ness opportunity in a problem by
solution - the creativity and innovation to
find a solution. Entrepreneurship doesn’t

Batch 17 taking the graduation pledge
IFMR Digest

HAPPENINGS 24

Chotu dot com etc. and wished good need. But, not for man’s greed.”

luck to all the passing out graduates.

It is important to be happy and pursue

Commencing the convocation cere- happiness. But, pursue a life with mean-

mony, Dr Sunder Ramaswamy, Vice ing. Happiness does not come from getting

Chancellor gave his words of wis- what you want. It comes from wanting

dom to the graduating class what you have. Success, like happiness

cannot simply be pursued. It must ensue

Excerpts from the speech of the as an unintended by-product of your per-

Dr Sunder Ramaswamy, sonal dedication to a cause greater than

Vice Chancellor yourself.

“For the graduating class of 178 students, Post IFMR, You’ll realize it is not what

Convocation represents a passage of trans- happens to you that often matters. It is

formation. Literally a new beginning. what you do with what happens to you

Every one of you graduating is endowed that matters. There will be many choices

with the following: Will, Imagination and before you, - how you face these choices,

Thought- WIT. What your teachers, fam- these turns in the road, what kind of atti-

ily and friends have done is to provide a tude, more than the choices themselves is

nurturing environment and would con- what will define the context of your lives.

tinue to do so as you try to hone these three

forces - Will, imagination and thought in Go ahead. Make the future of your own.

a meaningful and a positive way. Remember the acronym - WIT- Will,

Imagination and Thought.“ The Chief

John Lennon, the famous Beatle once Guest presented medals to students who

wrote, “Life is what happens to you when had demonstrated academic prowess,

you are busy making other plans”. So, be leadership skills, and all round excellence

thoughtful and be mindful of how you go through the year. Awards were also pre-

about your day. Have fun in whatever you sented to distinguished alumni from vari-

do. Have the joy of learning. Be generous. ous batches and programmes. 178 PGDM

Have convictions but be open-minded. (Full-Time) Students were awarded the

Whatever you end up doing or pursuing, graduation certificates.

focus on making a difference- howsoever Dr Kamal Ghoshray, Acting Resident Di-

small or big. Dare to dream. The future rector, Welcomed the gathering and also

belongs to those who believe in the beau- presented the annual report of activities

ty of your dreams. Continue to cultivate and achievements by IFMR.

your imagination which is essential to fos-

tering creativity and innovation. The event concluded with the National

Anthem.

Money is important. But, never equate

net-worth with self-worth. After all as

Mahatma Gandhi so wisely observed,

“There is enough in the world for Man’s

Issue 4, May 2018

25 HAPPENINGS

Medallists

The Chief Guest honoured the meritorious students with the following medals:

H T PAREKH MEDAL
for Best Outgoing Student

given to
Mr Lakshmi Narasimhan

A SIVASAILAM MEDAL
for Meritorious performance

given to
Ms Popat Komal Falgunbhai

C M KOTHARI MEDAL
for Meritorious performance

given to
Mr Pavan Kumar Polisetty

A M M ARUNACHALAM MEDAL
for Meritorious Performance
given to
Mr Shravan M

Distinguished alumnus awardees

Following alumni of IFMR were honoured with the Distinguished Alumnus award.

Mr. Arun Ramnath,
Head, Global Sales, Presales and Product Divisions,

CARE Risk Solutions [PGDM Batch 2022-04]

Mr.B. Mohana Rangan
, General Manager (Operations),
Somic ZF Components Pvt. Limited
[PGDM for Working Professionals Batch 2007-10]

Ms. Kalpana Kumar,
Chief Caring Officer,
Qube Cinema Technologies Pvt. Limited
[OUBS 2004 Batch ]

IFMR Digest

Issue 4, May 2018

27 HAPPENINGS

Shri
Bhadrashyam H.

Kothari
Memorial
Research Seminar

IFMR organized 4th Shri Bhadrashyam H. Kothari Memorial Research Semi-
nar during Apr 17 and 18, 2018 at Sri City campus. Research is at the heart of
IFMR ecosystem and hence this annual event is an important event in
IFMR’s academic calendar.

This event is dedicated to the memory of Late Shri Bhadrashyam Kothari,
who was an honorable Board Member of IFMR and also a source of inspi-
ration for us. The Seminar aims to provide researchers from IFMR ecosys-
tem such as the IFMR B School, IFMR LEAD, Center for Digital Financial
Inclusion (CDFI), JPAL South Asia to showcase their research work and get
feedback on the same. Dr. Sunder Ramaswamy, Vice-Chancellor, IFMR Uni-
versity and Dr.G.Balasubramanian,Vice-President, IFMR inaugurated the
seminar. Dr.Ramaswamy and Dr.Balasubramanian also addressed the au-
gust gathering during the inauguration which set the perfect tone for the
seminar.

More than twenty papers were presented across different disciplines such
as finance, HR, economics, development, climate change etc. were presented
at the seminar. The seminar had more than forty participants from IFMR
B-School, CDFI, JPAL South Asia, IFMR LEAD and neighbouring institution
IIT Tirupati.

IFMR Digest

HAPPENINGS 28

Issue 4, May 2018

29 EXPERT ARTICLE

Bridging the
Gender gap
in financial
inclusion

IFMR Digest Photo by Thanh Tran on Unsplash

Globally, an estimated 1.1 bil- EXPERT ARTICLE 30

lion women do not have access The Data Gap
to the formal financial system.
Universal access to and use of a As efforts to close the gender
range of financial services is an gap in financial inclusion
important enabler for inclusive gain momentum, it is im-
growth and poverty reduction. portant to acknowledge the
Access to appropriate financial data gaps that act as a bar-
services can help low-income rier to effective policymak-
households and small busi- ing and product design. A
nesses mitigate risk and vul- 2015 GBA Report suggests
nerability, and take advantage that the collection and use
of economic opportunities. of sex-disaggregated data is
improving at the global lev-
Data from the Global Findex el. Even so, this may be lim-
(2014) suggests that while there ited to efforts by global play-
has been a significant improve- ers such as the World Bank
ment in bank account owner- with its Global Findex and
ship among women between Intermedia’s Financial In-
2011-2014, the gender gap has clusion Insights, which pro-
remained at nine percentage vide nationally representa-
points. This gap is most pro- tive insights on the demand
nounced in the South Asian side. There is a need to im-
region, with nearly 250 mil- prove the collection and use
lion women lacking access to of sex-disaggregated data
a bank account in India alone on the supply side as well.
(Global Findex, 2014*).

Issue 4, May 2018

ttt

3219 EXPERT ARTICLE

It is sobering to note that on the
global stage, Chile is one of the
few countries that reports na-
India currently lacks a such tionally representative sex-dis-
a comprehensive data gath- aggregated banking data. Its
ering exercise at the national Superintendencia de Bancos e
and sub-national levels. The Instituciones Financieras (SBIF)
Census of India measures has built a 14-year panel data
banking access as a function set in two phases: 1) credit data
of household access. Gov- was aggregated by cross-ref-
ernment of India’s flagship erencing ID numbers between
scheme - Pradhan Mantri Jan the Credit Bureau and the Civil
Dhan Yojana (PMJDY) re- Registry with the sex of the bor-
quires one bank account to be rowers, and 2) savings and more
opened per household, which detailed product-level data was
is likely to be opened in the directly collected from banks.
name of the head of the house- Analysis of this data provides
hold, typically a male. While rich insights into the evolving
recent PMJDY data suggests nature of women’s financial
that women account for 52.7% access and usage over time in
of the total beneficiaries under Chile.
the scheme, the scheme’s im-
pact on women’s access and
usage is ambiguous in the ab-
sence of baseline/benchmarks
to draw comparisons (March
2018). Moreover, since the
rollout of the scheme did not
include gender specific tar-
gets or interventions ex-ante,
monitoring sex-disaggregat-
ed data at this stage seems

IFMR Digest

EXPERT ARTICLE 32

Smart Policy and Product

Design While men and women in

What do we do with all this low-income households may
data? Leverage it to design have similar financial goals,
smart products and policies their means to achieve these are
that address barriers in ac- often different, and governed
cess and use! Granular disag- by their gendered roles and
gregated data can strengthen access to economic resources.
the business case for formal To encourage higher adoption
financial institutions to serve and greater usage of financial
women, and design products services among women, finan-
and services that are tailored cial institutions need to design
products and services that take
to their requirements.
these gendered differences into

account. A financial diaries

study across India, Kenya and

Mexico provides tangible evi-

dence to support these differ-

ences.

Source- A Buck Short: what financial diaries tell us about building financial services that Issue 4, May 2018
matter to Low-income women, bankable frontier associates

t

33 EXPERT ARTICLE

For instance, the financial re- Looking Ahead

sponsibilities and prioritiza-

tion of aspirations differs wide- Financial inclusion is a key

ly within the household. While enabler for the 2030 Global De-

men were to focus on larger, velopment agenda, and particu-

longer-term goals, women larly for Goal 5 – gender equal-

were expected to manage the ity. It not only has an impact on

household from day-today economic empowerment, but

and fill gaps where needed, women’s agency and social capi-

especially around their own tal as well. To accelerate progress

investment priorities. Figure 2 towards Goal 5, policymakers

depicts a stylized life journey and financial service providers

of a woman from a low-income must work in tandem with glob-

segment in India, and is char- al development leaders to ensure

acteristic of the many liveli- that financial inclusion strategies

hood transitions and life-cycle and programs are informed by

changes experienced by wom- high-quality, disaggregated data

en. It is important to embed at the country and regional lev-

financial product and service els. As Chile’s experience sug-

design in women’s life jour- gests, a strong policy mandate to

neys, financial priorities and push for gender equality coupled

social networks. Designing with the right data strategy and

products and services that take incentives can produce effective

these transitions into account results.

can help provide women the

financial cushion necessary to References
A Buck Short: What Financial Diaries Tell us about
mitigate the adverse impact of Building Financial Services that matter to Low-in-

these changes on their day to come Women, Bankable Frontier Associates

day lives. Exploring the Power of Savings for Women, Bu-
vinic and Jaluka (2018), Center for Global Devel-
poment

Global Findex, 2014, World Bank* [The 2017
round of Findex data is expected to be out shortly
and had not been published at the time of submis-
sion of this article}

IFMR Digest Measuring Women’s Financial Inclusion: The val-
ue of sex-disaggregated Data, Global Banking Al-
liance for Women

EXPERT ARTICLE 34

About the author
Diksha is a Policy & Outreach Manager with IFMR LEAD. She
is interested in connecting the dots between research, pol-
icy and practice through her work. At LEAD, she engages
with key stakeholders to identify priority areas for research
and evaluation, build partnerships for influencing policy di-
alogues and outcomes, and drive outreach campaigns. Prior
to her foray in international development, she worked as
a Research Analyst with the Centre for Monitoring Indian
Economy. Diksha holds a Masters Degree in Economics from
the University of Mumbai.

Issue 4, May 2018

35 EXPERT ARTICLE and senior secondary level at
80 percent and 56 percent re-
TOWARDS spectively, access to secondary
IMPROVED education remains a pressing
ACCESS TO challenge in India. Mirroring
SECONDARY the policy emphasis over the
EDUCATION last 15 years, the vast majority
of research has also focused on
primary education; still there
are interesting lessons to draw
from existing global evidence
to understand what works in
improving secondary educa-
tion access for older children.

School participation is sensitive
The start of the new year wit- to costs and incentives and pro-
nessed the launch of ‘ASER’s grammes that pay for school
Beyond Basics report’ with the fees, or provide cash or in-kind
annual education survey for the transfers, even small ones, can
first time since it’s inception in improve enrollment and atten-
2005, taking a deep look at 14- dance. For instance, in Ghana,
18 year olds, an age-group that giving high school scholarships
constitutes almost 10% of India’s to low-income, academically
population The last year has qualified students led to large
also seen an increasing clamour increases in enrollment and ed-
among education stakeholders ucational attainment and also
for extension of the Right to Ed- closed the gender gap in tertia-
ucation (RTE) Act to secondary ry education enrollment. Elim-
education. This focus on sec- inating small complementary
ondary education is both timely costs associated with schooling
and critical. With the gross en- have also seen to lead to large
rolment ratio at the secondary impacts - for example, giving

IFMR Digest

CONTENTS

free school uniforms to sixth grade ing bicycles to 14 year old girls in
girls in Kenya reduced their like- Bihar increased girls’ enrollment
lihood of dropping out of school. in secondary school by 32 per-

cent, with the impact mostly con-
Distance or travel time to school centrated among girls who lived
can also be a significant barrier, between two and six miles from
and research shows that creating school—too far to walk, but not
new local schools in areas where too far to cycle!
few schools exist is an effective
way to increase enrollment and at- Programmes that address per-
tendance. Creating “village-based ception gaps or make the bene-
schools” in remote areas of Af- fits of education more salient for
ghanistan increased enrollment parents and students can change
rates from 27 to 69 percentage behaviour at a low cost. For ex-
points; girls experienced larger ample, informing grade 8 boys
enrollment gains than boys, and of the average wages earned by
the older girls in these communi- people based on education lev-
ties benefited the most. Reducing els in Dominican Republic and
travel time doesn’t always have to giving information about access-
mean building new schools - giv- ing financial aid for higher edu-

Marco Saroldi / Shutterstock.com Issue 4, May 2018

37 EXPERT ARTICLE

cation to low income students These insights give important
in grade 8 in urban Chile, in- directions, but we need more
creased school participation. rigorous research to inform
Showing examples can also policy. To this end, J-PAL has
be powerful in changing per- runs a Post-Primary Education
ceptions: in India, examples (PPE) Initiative funding new
of future career opportuni- research on open questions
ties for women in the BPO in- in secondary, vocational, and
dustry and of female leaders tertiary education. This grow-
led parents to invest more in ing body of rigorous evidence
girls’ education, along with will inform decisions of poli-
a change in girls’ aspirations cymakers and practitioners,
regarding career and age for and aim to identify innovative
marriage. solutions for improving ac-
cess, quality and relevance of
secondary education.

IFMR Digest Photo by Seth Doyle on Unsplash

EXPERT ARTICLE 328

About the Author
Megha Pradhan is a Policy and Training Manager at J-PAL
South Asia. In this role, she supports the regional office
efforts to promote evidence-based policymaking and
build capacity for monitoring and evaluation. Previously,
Megha was with the National Knowledge Commission, an
advisory body to the Prime Minister of India, where she
worked on education, agriculture, and entrepreneurship,
and was involved in policy outreach with various state
governments. She has also taught undergraduate cours-
es in Economics as an Assistant Professor at University of
Delhi. Megha holds a Masters in Economics from Delhi
School of Economics and University of Maryland, College
Park.

Issue 4, May 2018

39 COVER ARTICLE

Inclusive growth in
the Life Insurance
Industry

IFMR Digest Photo by Sharon Pittaway on
Unsplash

COVER ARTICLE 40

Though the Life Insurance Com-

panies Act was passed in 1912,
the Indian Insurance Sector begun
only in 19th January 1956, since
there was a disparity between Indi-
an and Foreign companies during
the early days. The first ever com-
pany existed in India for life insur-
ance business was Life Insurance
Corporation (LIC). The Parliament
of India passed the Life Insurance
Corporation act and created LIC in
September 1956 with the objective
of issuing Life Insurance Policies
to all the Insurable citizens in the
country, which in turn will provide
financial cover at a very reasonable
cost.

Life Insurance (LI) as a product
was introduced by the government
mainly for three reasons, firstly
to take care of the family finan-
cially/ to replace the lost income/
to pay off the debts/ provide edu-
cational funds for the Children in
case of a sudden Demise of a per-
son (especially the breadwinner
of the family). Secondly, it will be
a good saving for the future needs
like Marriage expenses/education-

Issue 4, May 2018

41 COVER ARTICLE

Did you know?

In India, insurance has a deep-rooted history.
It finds mention in the writings of Manu
( Manusmrithi ), Yagnavalkya ( Dharmasastra )
and Kautilya ( Arthasastra ). The writings talk
in terms of pooling of resources that could be
re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a
pre-cursor to modern day insurance. Ancient
Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and
carriers’ contracts. Insurance in India has evolved
over time heavily drawing from other countries,
England in particular.

IFMR Digest Source : History of Insurance in India
Ref : IRDA/GEN/06/2007

COVER ARTICLE 42

al expenses/hospital expens- During mid-1990s there was a
es. Thirdly, Investing in Life debate between the reformers
Insurance is one of the easy and the Insurance Regulatory
ways to reduce the tax load of and Development Authority
a citizen. (IRDA) that the Insurance be-
ing the nationalized industry
In a Society’s point of view Life fails to exploit the potentiality
Insurance increases the sense of the market, since the range
of ownership in Family, re- of products being restricted
sponsibility and also increases and inadequate to satisfy the
the importance of protection customer need. There was a
during unemployment and suggestion for private play-
health. LI reduces the insecu- ers’ participation in the indus-
rity factor of a person which try since there was a lack of
might in turn increases his competitiveness. It took lon-
productivity at his work place. ger time than expected. IRDA
approved the entry of Private
However till the private play- players in April 2000.
ers entered the market in late
2000, the ratio of Life Insur-
ance premium and the GDP
was just 1.9% for India whereas
for Japan and UK it was more
than 5 % (Source: The Chang-
ing Product-Life-marketing
case, ICMR) and around 80%
of the LIC premium came only
from endowment and Money

Issue 4, May 2018

43 COVER ARTICLE

IRDA was particular on the fi- made LIC to think of innovative
nancial stability of an entrant products and marketing strate-
and stipulated a very high gies and fight for their market
solvency margin and entry share.
capital requirements. Foreign
Direct Investment (FDI) was As per the Indian-Industries
allowed only up to 26%. Report, Today the Indian In-
This forced the foreign en- surance Contributes up to 7 %
trants to have collaboration to GDP which helps the coun-
with Indian Companies. This try by providing long term
reform in Life insurance busi- funds for infrastructural devel-
ness history made a major opments. And according to the
change in the industry. Insurance council Indian Life
Insurance Council is the fifth
Average first year premium largest life insurance market
collection during 1990s were growing at a pace of 32-34%.
Rs.2000 to 2500 Crores where-
as it was more than Rs. 6000 Companies focused on bring-
Crores in the first year (1999- ing need-based products and
2000) of private entrants in effective marketing strategies
the market. The competi- which will delight the customer
tion prompted the significant to buy an insurance policy. The
growth in LIC’s performance outcome of this market study
too with annual growth rate made the Private entrants to
of 36% compared to only 16% introduce innovative products
prior to this reform. (Source other than Endowment and
– Indian Insurance Industry Money back policies are of the
since 2000 – IRDA). following categories:

In 5 years, Private players
captured 35 % of the market
share from LIC which in turn

IFMR Digest

COVER ARTICLE 4324

Unit Linked Plans the Insurance companies.

When there was a boom in

online trading in India in the
Pension Policiesyear 2000, Unit Linked Insur-

ance policies were designed
for the public who had a de-
sire to invest into Equities.
In India, Government con-
cerns were the only ones offer-
ing pension plans for their em-
ployees post retirement, apart

This Insurance plan had var- from a few private ones. This
ious features like very less became an opportunity for
premium paying term (For Life Insurance
instance 3 yrs only for a very companies.

popular product called ‘Life

time’ in ICICI Prudential),

The Customer can customize Health Insurance
his premium as well his Sum

PoliciesAssured, The life is covered

even after he stops paying
the premium, The customer Increase in number of diseases
was given different fund op- and the exorbitant treatment
tions like equity, debt, income cost in the recent years had
and so on and he was given given Insurance companies to
a choice to choose where his capitalize on the issue and in-
money is to be invested, he troduce health insurance prod-
was given switch options too, ucts. Health insurance policies
the Companies came up with were designed in such a way
innovativeness in the product that it insures several illnesses
like partial withdrawal, loan and secure the customer finan-
against the Policy, premium cially if he/she ever requires
withdrawal, premium holi- treatment.

day and top-up options. ULIP

was a cut throat success for

Issue 4, May 2018

45 COVER ARTICLE

Though there were several Life insurance industry as
Medical insurance schemes such stepped up a substan-
available, they were under two tial growth since the Private
categories i.e., Hospitalization player’s entry. From Rs.9707
products and Critical illness Crores in 2000-01 in the
products, in which Hospital- first year, received premi-
ization products cover hospital um grew to Rs.19857 Crores
expenses which might also cov- in the next year, 2001-02. In
er frequent expenses, where as which LIC alone contributed
the latter covers only the critical 101% growth in one year.,
illnesses like Heart problems,
kidney failure etc. Definitely Competition
among the players played
Health insurance had been a a major role in this trans-
very successful segment in the formation apart from that
insurance industry since 2009. Inclusive marketing took
With Underwritten premium of an important role in Life in-
Rs.8000 Crores in the year 2010 surance industry, which en-
(IRDA Annual report 2009-10) sured that the public under-
stood the important of Life
There is no doubt that the prod- insurance.
ucts were new to the Indian
Customers when they were
launched. LIC also did its part
in market research and they
came up with new innovating
products like Jeevan Rekha and
Jeevan Anand., which had the
combination of two products
and double life cover.

IFMR Digest Photo by Joanna Kosinska on
Unsplash

COVER ARTICLE 46

Inclusive growth and Life Insurance

Industry :

Selling new products to new tract the impatient salaried

consumers : class. With Job insecurity on

the rise in recent times,invest-

Life Insurance companies fol- ment plans with shorter com-

lowed Ansoff’s matrix model mitment and lower lock-in pe-

(Market expansion grid, In- riods were introduced to attract

tensive growth strategies) to customers, which worked well

understand the market and for the Industry.

brought in new varieties of

products to the various seg- Income Levels and Income

ments of people. For instance tax: In the year 2000, When In-

when they did market re- formation Technology had a

search, they identified that boom in India, many software

short term premium paying companies and Multi-nation-

products will be successful al companies Invested money

in India, As Insurance Policy and created job opportunities

premium being the last pri- for the youngsters in the coun-

ority for a common man with try, with high salary package,

salary commitments. costing many to pay income

tax to the government. Life

Longer payment term was one insurance being one of the in-

of the major reasons for Policy struments to invest to save tax

lapsation. So they brought in under section 80 (C), 80 (CCC)

short term premium plans in and 80(D), Companies market-

Unit Linked products, where ed the products as ‘Tax-Savers/

the customer can withdraw Tax gain’ which facilitated the

the money after 3 years but ‘young customers’ segment by

still the policy continues till saving the tax through paying

his old age. Such products premium for Life insurance.

were designed in order to at-

Issue 4, May 2018

47 COVER ARTICLE Having a well-classified frame-
This in turn generated the hab- work of the different skill com-
it of saving among the public. ponents of courses and their
equivalent jobs, can signifi-
Created Fear factor and cantly augment our present
Securement Solutions: understanding of the poten-
tial of skills training courses,
For any human, life, income human capital development,
and health are not certain, and explore the possibilities of
So life insurance companies automation across sectors and
taught uncertainty to the pub- functions.
lic with their advertisements
and created solutions to han- Insurance companies like
dle them. There were many HDFC Standard life, Max new
Advertisements shown about York life took efforts to make
having a peaceful life after the public understand how
retirement and the solution important it is, to have insur-
being planning for a pension ance policy for children. Since
policy right away. Good upbringing of children
has become life for most par-
As considerable public re- ents, Insurance is about long-
sources are being spent on term financial planning, helps
skilling programs in India, it parents in securing their chil-
is important to build a deeper dren’s future. Insurance com-
understanding of their linkag- panies also addressed the
es with labour markets, and issues like consequence of ac-
the expected interplay with cidental death, accidental in-
technological changes in dif- ability, sudden health prob-
ferent sectors. lems and Benefit of saving.

Products for Rural Market:

IFMR Digest IRDA came up with a regula-
tion called Rural Sector Obli-

20

gations, where the Insurance COVER ARTICLE 48
companies must underwrite
certain no. of policies for the life insurance policies which in
Rural Sector. These products turn important for an economy
had choices for customers as it is a one of the major con-
to select the amount of pre- tributors for GDP and it also in-
mium and sum assured. In- creases the habit of Saving mon-
surance Companies started ey directly and indirectly (tax).
to open offices in rural areas The reasons stated here for in-
with minimum staff strength clusive growth needs empirical
which is otherwise called as validation.
‘spoke branch’. This move
gave success to many insur- According to Last year (2017)
ance companies. report, Transformative Agenda
for The Indian Insurance Indus-
With the above points it is try and its Policy Framework’,
clear that since 2000-01, after authored by H Ansari, ‘India’s
the entry of private players current insurance penetration
and stiff competition com- rate at 3.42%, far below the
ing in, the insurance industry global average of 6.2%’, report
could attain inclusive growth mentioned “ 1% rise in insur-
with different marketing ance penetration translates into
strategies which have made 13% reduction in uninsured
the customers to invest in in- losses-an increased investment
surance from different seg- equivalent of 2% of national
ments like various locations, GDP and a 22% reduction in
income levels, and catego- taxpayers contribution” This
ries. As on 2017, more than shows the importance of LI in-
a dozen of private life insur- dustry in India.
ance players and LIC, have
given a different dimension
to the product life insurance
as such which created inter-
est among the public to buy a

Issue 4, May 2018

49 COVER ARTICLE

About the author
Sathya has got a rich work experience of 17 years, which
includes almost a decade in industry and as an Academi-
cian for the past 7 years. He completed his graduation in
Vivekananda College, followed by PGDBM at IFMR.
He has held positions like Area Sales Head & Area Manager
with ICICI and HDFC Bank. He has written various articles
in international journals recognised by ISBN/ISSN in the
last few years and to name a few “Lessons from Anna-
chis of TamilNadu”, IIM Ranchi, International Conference
2012, “Return on Search and buying behaviour of the
Business Students”, ICMBE 2014 International Conference,
“Factors influencing Online Information Search among
Doctors with special reference to Medical Equipments”,
International Journal of Sales & Marketing Management
Research and Development,2017. He was associated with
couple of start up companies and an Ayurveda hospital as
a marketing consultant.
R.S.Sathya Saminadan was awarded the ‘Award of Excel-
lence’ by International Multidisciplinary Research Foun-
dation in May 2016 for the contribution towards the field
of Marketing.

IFMR Digest