Insurance sales via kirana or neighbourhood grocery stores has now taken a back seat as the regulatory body is extending timelines for these entities to acquire the skills to sell these products. It was earlier proposed that grocery stores, petrol pumps and phone booths would be allowed to sell simple insurance policies.
In 2014, Insurance Regulatory and Development Authority of India (Irdai) in a draft proposal had said that micro insurance products could be sold by local grocery stores, public call offices (PCOs), fuel outlets, and ration shops in rural areas.
Here, the idea was to improve the penetration levels of insurance and deepen financial inclusion.
This proposal, mooted as early as 2001, was intended to have local shopkeepers in rural areas sell policies to their customers based on each one’s needs.
However, insurers had expressed apprehensions about this move since they said that specialised skills would be required to sell a financial product.
Micro insurance refers to general or life insurance policies offering an assured sum of Rs 50,000 or less. The average size of this category is Rs 2,000-4,000 a policy. This is aimed at coverage for low-income households in rural areas.
Senior officials associated with this development said that at present, those in kirana stores were not skilled enough to sell need-based insurance.
Other individuals associated with insurance distribution need to undergo training. Currently, insurance agents need to undergo mandatory training of 50 hours. Licensing rules by Irdai stipulate agents have to undergo 50 hours’ training for a basic licence and 75 hours’ training for composite licence.
Insurance agents also have to undergo a 25-hour practical training to renew their licence, valid for three years. Composite agents will have to undergo practical training of 50 hours for renewing their licence.