LIC plans micro-risk products for rural poor

The Life Insurance Corporation of India (LIC) is planning to forge an alliance with the four state-owned general insurance companies to jointly develop micro-insurance products affordable for the rural poor.

The new Insurance Regulatory and Development Authority (Irda) regulations permit life insurance companies to offer non-life micro-insurance products, provided the life insurer has a tie-up with a non-life insurance company.

Similarly, non-life insurance companies can also offer life products if they have a tie-up with a life insurer.

"LIC would prefer to have an arrangement, preferably with all the government-owned general insurance companies, but a final decision would depend on Irda's views," T S Vijayan, managing director of LIC, told reporters on the sidelines of a seminar on corporate governance organised by the Indian Merchant's Chamber.

LIC would be able to distribute micro-insurance policies through its existing agent network and will also appoint agents only to hawk micro"�insurance products. Besides servicing policies, the micro-insurance agents would also collect premium.

Vijayan said LIC would have to rework its organisational network to make the business of micro-insurance cost-effective and also make it serve the target customer segment.

The minimum and maximum cover for accident, health and endowment policies would range between Rs 5,000 to Rs 50,000 per policy.

The remuneration or commission to agents would be a maximum of 10 per cent for single premium life product and 20 per cent for other products. For non-life products, the commission to micro-insurance agents would be upto 15 per cent of the premium.

For issuing group policies, the total membership should be at least 20. Insurers have the discretion to fix agent commission within the overall limit applicable to individual policies.