New micro-insurance policy for poor on cards….Viswanath Pilla
The idea is that there should be a single product designed to deliver multiple benefits and cover multiple risks, says The Irda chairman
The idea is that there should be a single product designed to deliver multiple benefits and cover multiple risks, says The Irda chairman
Hyderabad: The Insurance Regulatory and Development Authority (Irda) on Tuesday said it has asked the Life Insurance Council to study the feasibility of introducing a single micro-insurance product that combines elements of life insurance, non-life insurance and health insurance targeting poor and low-income households in rural areas.
The idea is that there should be a single product designed to deliver multiple benefits and cover multiple risks, Irda chairman J. Hari Narayan told reporters. The single product will also help to reduce cost and make distribution more efficient.
The (proposed) product protects against life, it also protects against personal accident, it protects against loss of assets such as cattle, motorcycle and others, he said.
An insurance policy qualifies as micro-insurance policy if the benefits dont exceed Rs. 50,000, according to Irda, and the distribution channels have been clearly defined as non-governmental organizations, self-help groups and microfinance institutions, apart from insurance agents, corporate agents and brokers. Most micro-insurance products are offered by microfinance institutions in combination with micro-loans. The regulator has expressed concern over such measures.
This whole question of tying and bundling of insurance products with other products is a major issue, Narayan said. We have noticed several such cases that the entity offering the loan and hence micro-insurance product tends to charge a very high rate for this service.
He said it had found gaps in the post-sales service and lower acceptance of claims by insurers offering these products.
The experience hitherto has been that, with notable exceptions, claim experience on micro-insurance products has not been of the same level as it is for normal insurance products, even if covering similar risks, Narayan said. We need to examine the implications of it further and only then will we be in a position to come up with a regulatory intervention.
Irda has proposed a lead insurer model with two-three insurance companies assigned a specific geography to design, develop and distribute micro-insurance products.