New micro-insurance norms soon

Sum assured for such products may rise to Rs 2 lakh

The sum assured  for micro-insurance products may rise to upto Rs 2 lakh to ensure more banking correspondents and distributors sell such products.

Earlier in 2014, Insurance Regulatory and Development Authority of India(Irdai) had brought out a revised draft on the micro-insurance products.

The regulator had said that partial withdrawals may be permitted from the second policy year onwards, subject to ensuring minimum balance equivalent to one annual premium in the policy account.

Final guidelines are expected to be announced in the next few weeks.

Micro-insurance products, which offer coverage to low income households, are a mechanism to penetrate rural areas. It is a general or life insurance policy with a sum assured of Rs 50,000 or less.

In a communication to the regulator and ministry officials, insurers had sought better remuneration for distributors of micro-insurance including banking correspondents so that more institutions are incentivised to sell such products.

"With a higher ticket-size of Rs 1 lakh or above, distributors can earn higher commissions from the products that they sell," said a senior life insurance executive.

Irdai has said that regional rural banks, micro-finance institutions, district cooperative banks, non-governmental organisations, self-help groups, urban cooperative banks, banking correspondents and individual owners of kirana stores, public call offices, petrol bunks and fair-price shops in rural areas will be allowed to sell these products.