Insurance

IRDAI panel offers “microinsurance” modules for low-income groups and small businesses

A committee appointed by regulator IRDAI has proposed more than a dozen low-cost “microinsurance” modules to expand protection plans for the uncovered population and small businesses. The committee suggested that insurers should be allowed to adopt a modular approach using various permutations and combinations for Combi MI (Micro Insurance) products.

‘MI’ aims to protect low-income people with affordable insurance products. MI’s goal is to empower people to cope with and recover from common risks such as the death of a breadwinner, paying for treatment for serious illnesses, rebuilding destroyed homes and businesses, among others.

A one-stop solution to meet the insurance protection needs of these targeted groups will go a long way toward achieving the goal of increasing insurance penetration among these layers of society, the group said in its report.

“There is a case for having a Combi MI product that can be developed on a modular basis, giving the insurer the flexibility to offer cover to different groups and individuals according to their specific protection needs,” says the report.

The panel recommended 14 standard modules and suggested that these products could be sold by insurers either on an individual basis or on a group basis. Insurers, he said, can follow a modular approach using various permutations and combinations, leaving the choice up to the applicant.

Some standard products prescribed by the Insurance Regulatory and Development Authority of India (IRDAI) may be offered as modules but with a restricted sum assured considering the target segment.

“It is recommended that the Combi MI product can be requested by all distribution channels authorized to distribute insurance products by IRDAI. It can also be sold through the online mode, where possible,” the report states.

The committee has also suggested a maximum sum insured for each of the modules it recommends. These include, Rs 5 lakh for ‘Saral Jeevan Bima’, Rs 5 lakh for ‘Bharat Griha Raksha Policy’, Rs 10 lakh for ‘Bharat Sookshma Udyam Suraksha’, Rs 3 lakh for personal accident and Rs 2,000 per day for 30 days per year for hospitalization costs.
“Ideally, every insurer should offer the Combi product,” the report says.

The committee was of the opinion that the combination of the MI product with various government schemes at the Center level as well as at the State level will increase the reach of the product and also facilitate the conviction of the target groups on the benefits of insurance protection.

The panel suggested that one of the options to ensure uniformity and efficiency in the administration of the Combi product through the use of technology is to develop a common technology platform with the participation of the Life Insurance Council and the General Insurance Council.

IRDAI has sought stakeholder feedback on the report by May 15.