Micro insurance norms to be out soon

Don't want to miss the best from Business Standard?

Micro insurance regulations for the insurance sector is set to be finalised soon. The regulations prescribe a framework within which insurers can offer affordable micro insurance products to a targeted group of rural and urban insurable population.

According to the chief executive of a life insurance company involved with preparation of the report on the guidelines, they have prescribed offering the products at a much lesser cost to the Indian population. The Insurance Regulatory Authority of India (Irda) will take a final view before releasing the guidelines.

In September last year, the finance ministry the finance ministry has set up eight committees headed by chief executives of insurance companies to examine issues plaguing the sector. Rural and micro insurance was one of the committees. The ministry had asked each CEO to prepare a comprehensive note capturing issues, likely suggestions and who the subject-wise authority would be (the Irda or the tax department) for each issue.

Last year, under the micro insurance regulations, Irda had proposed to allow other categories like district cooperative banks, regional rural banks, primary agricultural co-operatives societies, individual agents to be eligible as Micro Insurance agents. Taking a cue from business performance compared to actual potential in this segment, Irda had decided to revisit the micro insurance regulations.

To cater to this segment, Irda proposed an option of appointing micro insurance agents either to any one sector of micro enterprises, small enterprises, medium enterprises, or to all three or any combination of two.

Also, in order to encourage micro insurance agents to maintain a reasonable persistency, Irda had proposed to link the micro insurance policy remuneration allowed, to the persistency rate of the micro insurance agent.