Saturday, May 7, 2011

Financial Inclusion and CSE

James Austin and Ezequiel Reficco in their HBR working paper (March 2009) aimed to address the contemporary challenges in Corporate Social Responsibility (CSR) through an innovative process called Corporate Social Entrepreneurship (CSE). According to Austin & Reficco "CSE aims to produce a significant and comprehensive transformation of the way a company operates."

Top leadership of an organization should be visionary enough to identify potential talent within the company who demonstrates high levels of energy and enthusiasm, is proactive in taking up responsibilities and has the fire in the belly to break the sloth of conventional ideas - even if it requires to put his/her foot down to disagree with other fellow mates.

I was curiously thinking how CSE can have an impact on the human welfare element. Let us take the example of insurance business in India - it has all potential to be used successfully for financial inclusion but, unfortunately have not gained much momentum primarily because operating performance of this industry was not properly aligned with professed commitment to social value creation. The top- and middle-level management in this industry is more interested to drive business volumes rather than ample coverage of people under insurance benefit.

The agency based system in the Indian insurance sector has diluted the core objective of insurance as a tool for risk management. Today most of us still consider insurance as a tool for maximizing financial returns. The agents (mis)sell the insurance products by luring customers by how much they can earn, by paying a stipulated premium per annum, at the end of the maturity of the policy.

Insurance companies can empower their agents to build their income streams through CSE and social value creation and not just fulfilling hourly/daily/weekly revenue targets. The same agents can become the torchbearers of spreading awareness among the rural people on the true benefits of insurance products. If the innovative insurance products can be supplemented with a league of motivated sales & marketing force it can address the financial inclusion challenges to a great extent.

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