Insurance is usually hard to sell because insurers seek money in return for a promise to cover the losses that could incur to them in the future due to uncertainties. This article discusses how insurance companies distribute their products in rural areas.

Historically, insurance products have been unsought and were distributed only by insurance agents. But today, insurance companies resort to different distribution channels to market their insurance products in rural India. Insurance companies that focus on distribution have to also focus on distribution costs.

Micro-insurance involves small ticket policies customized for the lower-income groups. The Union Home Minister, P Chidambaram, is of the opinion that insurers need to look at other distribution channels, such as post offices for marketing micro-insurance in rural India. The nation's post office network is vast and micro-insurance products can be delivered through them.

The former IRDA Chairman, N Rangachary, felt that the insurance sector should expand into the vast rural markets and a fresh approach is required to sell the products in these markets because of the inherent limitations. According to him, the post offices network was the best suited to spread insurance across the country. With 1,60,000 post offices, there is a ready-made system in place to develop the insurance sector.

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