Letters: Simpler insurance

This refers to the report "Micro insurance sales norms: Sector uneasy with latest Irda proposals" (February 8). The Insurance Regulatory and Development Authority (Irda) has proposed to widen the scope of micro insurance products by including policies to the MSME sector. The list of entities who can sell micro insurance has been enlarged but it still needs some thought since more individuals have crept in, especially in rural areas where some continuity issues may be unsurmountable. Irda needs to align its rural area Census definition to the Reserve Bank of India's view to make referencing simpler. The payment of claims can also be routed electronically through bank accounts since it has only been proposed through cheques. The regulations introduce the concept of issuing policy cards instead of policy documents. Alternatively, some emphasis should have been laid on simple brief policy documents with standard clauses. It could be useful if Irda releases a few standard clauses for micro insurance policies and leaves the pricing to individual insurance companies. This will help the micro insurance agents learn the basic products faster and to serve customers better. It is equally important that a common vocabulary of micro insurance products and terms is picked up by the poor sections of the society if the cause of financial literacy in insurance is to be served. The insurance industry must shed its affection for the fine print at least in this small sub sector.

Y P Issar Karnal

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