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Insurance Cos. piggy ride on FMCG to make inroads into untapped market

11-December-2002
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Insurance Cos. piggy ride on FMCG to make inroads into untapped market

Aware of the fact that Indian market is chronically under-insured, private insurance companies are teaming up with FMCG players to make inroads into untapped markets to increase their earnings.

The ease with which insurance policies are bundled with products as diverse as toothpaste, car, two-wheelers, soaps, home loans, batteries, credit cards, hospitality and telecom sector has got both the FMCG and insurance companies excited. This potent marketing tool has made it possible for the insurance companies to make inroads into untapped markets and for the FMCG brands to further build its brand equity.

Let's look at some such offers:

- Buy 200 gm Amar toothpaste from Vardhaman Chemicals get prepaid accident insurance worth Rs 25,000. A single person can avail of up to 12 packs and enjoy insurance cover of Rs 23 lakh. The insurance company involved is Tata AIG.

- Kopran's "The Baby Smyle Suraksha Yojna", in association with Bajaj Allianz offers free accidental policy to be followed by a mediclaim policy.

- HLL's toothpaste brand Pepsodent tied up with New India Assurance offering a dental insurance worth Rs 1,000 with every tube of toothpaste.

- Maruti Udyog tied up with Bajaj Allianz to offer insurance policy for its B-segment cars.

- Citibank tied up with Royal Sundaram Alliance to offer free health and personal accident for children with its credit card.

- Corporation Bank offers Rs 1 lakh life insurance policy while opening an account with them.

- Punjab National Banks, ICICI Bank bundles free home insurance policy with its home loans.

- Amara Raja Batteries tied up with Royal Sundaram Alliance to offer free fire, burglary and personal accident cover for its retailers.

Win-win situation

- Clubbing of insurance with FMCG products can be a win-win situation for both insurance players looking for business as well as for the FMCG brands wanting to make an impact in the market.

- Insurance companies are able to expand their base easily in cost-effective way courtesy FMCG companies, especially in the rural markets. This way not only the insurance companies are able to build brand awareness but also get an opportunity to reach wider segment of consumer especially in the rural areas. Thus bringing insurance to people who do not have the slightest idea of what an insurance policy is all about.

- For FMCG brands it's more than spreading the good word about the advantage of insuring. It helps to strengthen its brand equity.

- If insurance is about security and protection for the long term, the brand values of FMCG product reflect the same philosophy and thus help in developing brand equity and getting consumers into their fold.

- Since there is no detailed underwriting involved, selling insurance policy to masses has become easier. And this very fact has become part of the marketing strategy for a whole range of FMCG companies.

- Not only insurance companies but also FMCG companies are confident about the efficacy of bundling insurance policies with variety of products. Though the premium offered with product to consumer would effect the balance sheet but it will eventually help the company in increasing their revenues as more and more people would go for the product.

So next time while buying a product, check whether insurance is bundled with the brand. The way this concept is catching on, it won't be a surprise that you might be offered fire insurance with purchase of matchbox or lighter!

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