Media

Birla Sun Life Insurance increases rural penetration

29th November, 2005

Birla Sun Life Insurance (BSLI), one of the largest private life insurers, is gearing itself to take advantage of the vast rural opportunity that has opened up as a result of the revised definition of rural areas by the IRDA. Over the last four years, BSLI has painstakingly built its rural infrastructure to create a cost-effective distribution network across the country.

Says Mr. Nani Javeri, CEO, Birla Sun Life Insurance, "While we have been surpassing our rural targets every year, we envision that going forward our rural business will contribute about 20 per cent of individual life sales through the sales of packaged products like LifeCompanion.

With the IRDA revising the definition of rural areas, the total population falling into the category of rural has increased from 42 per cent to 72 per cent of the total population and
BSLI is best placed amongst all the private players to reap the benefits"

BSLI has evolved a three-pronged strategy for distribution in rural areas. In the first year BSLI launched its rural operations from the Hindalco unit at Renukoot, which was chosen as the "model set-up". Hindalco's well-developed rural network and its well-trained village extension workers (VEW) were an ideal launch pad for the rural business. Additionally, seven more units of the Aditya Birla Group (ABG) were added to the network in the states of U.P., Jharkhand, Orissa, Rajasthan and M.P.

To further increase its reach, BSLI entered into tie-ups with some of the largest NGOs across India, which are doing excellent, work in the rural areas. To name a few, Dhan Foundation, MYRADA, Pradan, Prayas and micro finance agencies like Spandana and Cashpor.

BSLI has now commenced the sale of policies through its branch network to bolster its reach in the rural areas.

The table below gives BSLI's presence through the different channels in the various states:

State
Indirect Channels
Direct Channels
Number of ABG units
Number of NGO tie ups
Number of Branches
Total
Uttar Pradesh
2
9
3
14
Rajasthan
1
5
2
8
Jharkhand
3
4
1
8
Orissa
1
-
-
1
Tamil Nadu
-
2
2
4
Karnataka
-
1
1
2
West Bengal
-
1
-
1
Madhya Pradesh
1
1
-
2
Andhra Pradesh
-
1
1
2
Maharashtra
-
-
4
4
Bihar
-
-
2
2
Assam, Kerala, Punjab, Chhattisgarh
1 each
4
Grand Total
8
24
20
52

Over the last four years, BSLI through its distribution partners has reached close to 37,500 villages in 35 districts and 471 sub-districts across nine states in the country.

BSLI' s specially designed product for the rural market "Bima Kavach Yojana" has been a runaway success. Continues Mr. Javeri, "Bima Kavach's success has helped us achieve significant penetration in the rural areas. With the high acceptability of the Birla Sun Life brand, the time is ripe for us to tap the vast rural potential through the sales of our savings linked policies."

The company has recently identified about 20 of its branches (see table) to implement its rural strategy. These branches will use the "concentric circle" approach to penetrate the rural market. In the first phase of this approach, each of the selected branches identifies two high potential rural locations in the first concentric circle within a radius of 50-100 km. Twenty six rural agency managers have been appointed in these locations to recruit insurance advisors to sell BSLI's policies.

BSLI has been consistently exceeding its rural targets since the first year of its operations. In the last fiscal, the company sold close to 48,128 policies in the rural areas, which constituted nearly 24 per cent of the total individual policies sold by the company. The table below illustrates the rural performance of BSLI since inception.

Financial Year
Total Policies Sold
%age contribution from ABG units
%age contribution from NGOs
2001- 02
2005
100
0
2002 -03
10421
62
38
2003 -04
25893
47
53
2004-05
48128
24
76
1 April 2005 to 15 Nov 2005
33225
12
88

In the current year till 15 November 2005 the company has already sold about 33,225 policies. With the increasing affluence in the rural areas, the company aims to achieve about 20 per cent of its rural sales through its savings linked policies designed for the urban market.

About the Aditya Birla Group
The Aditya Birla Group has a turnover exceeding Rs. 33,000 crore (as on 31 March 2005) and is one of the largest business houses in India. It enjoys a leadership position in all the sectors in which it operates. With over 75 business units, spanning the South East Asian belt, Africa, Canada and the UK among others, it is reckoned as India's first multinational corporation. The group is anchored by 72,000 employees and has seven lakh shareholders, with an asset base of over Rs.23,000 crore.

Additional information is available at www.adityabirla.com

About Sun Life Financial Inc.
Sun Life Financial Inc. is a leading international financial services organisation providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Tracing its roots back to 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31 March 2004, the Sun Life Financial group of companies had total assets under management of USD 282 billion.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol "SLF".

Additional information can be found at: www.sunlife.com

For further information kindly contact:
Ms. Anjana Grewal,
Vice President - Marketing & Communication,
Birla Sun Life Insurance Company Limited,
Tel: 022-5678 3333.
email: anjana@birlasunlife.com