Indian economy has been an agrarian economy, and it stands fourth in the world in terms of output and income generated from agriculture activities. Despite such growth, there is lack of insurance penetration in the rural sector to cover their risks, which arises mainly from agriculture and poor health conditions. Hence, exploring the rural markets poses to be a herculean task to the insurers. Experts are of the opinion that the urban markets are rapidly getting saturated, and the future growth potential lies in the rural areas. To explore this potential area, insurers may have to use new strategies such as designing innovative products, need-based selling of insurance, better penetration, and development of new channels, etc.

Indian insurance market can be divided into urban and rural markets. These two segments are diverse in nature and have distinguished characteristics. The economic growth of the two has not been the same. A wide disparity exists between the per capita income, literacy rate, lifestyle, living standard, preferences, etc. From the insurance perspective, there is a significant difference in the insurance penetration levels of the urban and rural markets. Statistics show that the rural population has lower reach. The agent per 1,000 persons is around 0.25, which is far low in comparison to that of the urban market.

Experts are of the opinion that urban markets are rapidly getting saturated, and the future growth potential lies in the rural areas. With the advent of the global insurance companies and growing competition, the rural markets are also gaining attention. Among both life insurers and non-life insurers, somehow the life insurance segment got more attention in the rural sector as compared to non-life insurance basically because of high returns involved. In general insurance, the public sector has penetrated the rural sector for vehicle insurance as this is mandatory. But for the private sector exploring the rural sector is a herculean task.

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