MICROCAPITAL STORY: Microfinance Institution, IFFCO-TOKIO General Insurance (ITGI) of India Launches Microinsurance Product

IFFCO-TOKIO General Insurance Co. Ltd. (ITGI) recently launched a microinsurance policy targeting India’s low-income rural population. The policy will cover people from 18-60 years of age and will be available at an affordable premium of USD 2.46 (including taxes) for a couple, covering the areas of property insurance (household contents) and critical illness (stroke, cancer, heart disease, loss of limbs, and coma), with USD 245 to be available in coverage per area. Children can be included in the policy for an additional premium of USD 0.61 per child.

ITGI is one of India’s rural insurance pioneers, having provided their first microinsurance services in 2001 when they launched a specially designed personal accident policy linked to the purchase of fertilizer that has since distributed a total of USD 10.6 million in claims to 7,300 farmers nation-wide.

A report released in 2005 by the Indian Council for Research on International Economic Relations (ICRIER) states that though risks faced by the lower-income population are no different from those faced by others, the poor are more vulnerable to these risks because of their economic circumstances. The report further states that microinsurance services are necessary in overall poverty reduction strategies. ICRIER estimates the Indian market for microinsurance in 2008 at USD 6.14 billion.

A 2002 World Bank study reports that 25 percent of hospitalized Indians fell below the poverty line as a result of costs incurred from their hospitalization. The same study reports that 40 percent of hospitalized patients in India must take loans or sell assets to pay for hospitalization. With microinsurance services, such financial crisis can be avoided.

IFFCO-TOKIO Genera Insurance (ITGI) is a joint venture between the Indian Farmers Fertilizer Co-operative (IFFCO) and Tokio Marine and Nichido Fire Group, Japan’s largest listed insurance group. Incorporated in 2000, ITGI is based out of Gurgaon, in the northern Indian state of Haryana. ITGI is the third largest private-sector general insurance providers with 170 offices nation-wide.

By Melissa Duscha

Additional Resources:

IFFCO-TOKIO Genera Insurance (ITGI)

IFFCO-TOKIO Launches Micro-Insurance Product

Indian Council for Research on International Economic Relations (ICRIER)

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