Your kirana store may sell insurance too

In a move to take insurance products to the doorsteps of customers, the Insurance Regulatory and Development Authority (Irda) is giving finishing touches to guidelines for “monoline” insurance agents — agents who will be authorised to sell only one simple insurance product.

An Irda official said the idea was to improve the penetration levels of insurance and deepen financial inclusion.

So, don’t be surprised if the helper at the local medical shop advises you to take a personal accident cover or if you are offered a home insurance cover at your neighbourhood kirana store.

“Since the opening of the sector, the penetration of life insurance has risen from 1 per cent to 6 per cent. But for the general insurance industry, it has remained at 0.6 per cent, which is very low compared to other developing countries. These steps are the need of the hour,” said Gaurav D Garg, managing director & CEO, Tata AIG General Insurance Company.

The guidelines will reduce the mandatory training hours as monoline agents will have to sell only one product. At present, Irda mandates a 25-hour training module, which covers every product under the general insurance industry starting from home and fire to marine hull and aviation.

“The monoline agents will not have to understand the complex products. They will be trained only on the simplest of products which they will sell,” said the Irda official.

For instance, travel agents may start issuing travel insurance policies.

Similarly, a car dealer does not have to go through a rigorous training to issue a simple car insurance cover, says K Krishnamoorthy Rao, managing director and CEO, Future Generali India.

Only agents certified by Irda can sell insurance products in India.

After training, these agents will be provided pre-underwritten and simple policy documents, preferably on a single piece of paper. These would be like “ready-made” policies, he said.

Also, the premiums for most polices will be marginal, say Rs 100 for a personal accident cover. The agents will get a commission of 10 per cent per policy. “There could be a flat commission as well,” said the official.

The concept already exists in Singapore, where booklets on simple insurance products are made available to monoline agents, says an insurance broker.

“For instance, there is a booklet on home insurance products based on the size of the apartment. Now, if you choose to stay in a three bedroom-hall-kitchen apartment, they will just tear the relevant policy form from the booklet and give you the home insurance policy instantly,” he added.

During 2010-11, the general insurance industry collected Rs 42,568.52 crore by writing new policies, up 21.7 per cent from Rs 34,984.08 crore last year.

“Once the guidelines are in place, they will open a new distribution channel for the non-life insurance sector,” said a senior official of a state-owned general insurance company.