The Insurance Regulatory and Development Authority (Irda) has asked insurers to develop products to be marketed exclusively through common service centres (CSCs) and file these products with the regulator for approval. In its guidelines on the CSC model, Irda had said these products shouldn’t have a sum assured exceeding Rs 2 lakh (except motor insurance), per life or risk.
In its regulations, Irda said for solicitation of insurance business, CSCs would have a rural authorised person (RAP), who would have to complete 20 hours of theoretical training from a recognised institution and, subsequently, undergo an examination. The RAP would assist customers in selecting policies according to their needs. He/she would also provide detailed information about customers to the insurer and offer customer servicing services. For a CSC special purpose vehicle to become an insurance intermediary, it would have to apply for a licence from Irda. This licence would be valid for three years, after which it can be renewed for another three years.
The CSC model is an initiative of the National e-Governance Plan. It is aimed at providing high-quality and cost-effective video, voice and data content and services in the areas of e-governance, education, health, tele-medicine, banking and financial services, utility payments, entertainment, etc.
The Centre had planned to roll out about 1,00,000 CSCs across the country, with a focus on the rural areas. Each CSC is expected to serve a cluster of six-seven villages, covering about 6,00,000 villages across the country.
The CSC public-private partnership model envisages a three-tier structure---the CSC operator, the service centre agency (responsible for a division of 500-1,000 CSCs) and a state-government designated agency responsible for managing implementation across the state.
Insurance companies have said the CSC model would reduce distribution costs about 30 per cent in rural areas, as these activities would be carried out by RAPs.
According to Irda’s annual report for 2011-12, insurance penetration, which surged consistently till 2009, slipped to 4.1 in 2011 from 5.1 per cent in 2010. Insurance penetration is the ratio of insurance premium to gross domestic product.