Irda suggests an 'everything product' for villagers

Product to address several risks of a rural household with a single premium

In a bid to make insurance a significant part of the ongoing financial inclusion initiatives in rural areas, the Insurance Regulatory and Development Authority (Irda) has come up with the concept of an ‘everything product’ to address several risks of a typical household, with a single premium.

Disclosing this, Irda Chairman J Harinarayan said the regulator was awaiting a response from the Life Insurance Council to its suggestion on such a product that would be available only under the rural social responsibility obligation mandated to insurance companies by law.

Speaking at a conference organised by the Associated Chambers of Commerce and Industry on integrating insurance into financial inclusion, Harinarayan referred to an “everything product”, while stating “a relook at products is necessary when we are dealing with this segment of population”.

He said the idea was to make the offering simple as well as comprehensive. It is to cover risks ranging from life to loss of assets that constitute the livelihood of the insured. The product would also aim at converting essentially a ‘push product’ such as insurance at least partly into a ‘pull product’, for greater acceptance in rural areas.

The regulator has suggested three pricing options for the product to be chosen by the insured, depending upon coverage of short-term or long-term risks.

Apart from the issues of complexity, lack of trust and problems of mechanism in the sale of products, there are inherent issues in the law, such as classification of a micro insurance product based on the size of insurance benefit instead of the premium outgo. It has made insurance penetration a difficult proposition, Harinarayan noted.

Adoption of a lead bank model to make field plans for marketing micro insurance products in rural areas and employing the talk-time recharge system of mobile phone companies for premium collection were among other suggestions he made to insurance companies on current bottlenecks.