70% of Indian population resides in the rural area but they have negligible insurance coverage. Thus it opens a huge opportunity for insurance marketers of micro-insurance products.
Micro-insurance is a form of finance designed to suit the needs of rural people who do not have access to conventional forms of insurance. It consists of small premium policies on life, weather, accident, household, fire, cattle and motor insurance. The insurance needs of rural India are different from their urban counterpart and cannot be met by formal insurance products.
All insurance products in India attract a 10.36% service tax, but to increase penetration in rural sector and to make insurance within reach of the villagers, it is important that this tax is done away with.