Following the success of mobile revolution in the country, the Insurance Regulatory and Development Authority (Irda) is looking at prepaid products to boost microinsurance.
According to Irda chairman J Hari Narayan, this revolutionary idea can become reality, if the insurance providers, like the telecom service providers, are as quick to give instant policies at a desirable cost to cover multiple benefits and risks, especially for the low-income people.
Explaining this thought at a national conference on financial inclusion organised by industry body Assocham, the regulator said that the idea of prepaid insurance products would be beneficial for low-income people, which will also become confirmed premium payments for this section of people. ?May be, this could become one of the ways forward for improving the scale and reach of micro insurance products to this section of the society,? he said.
Releasing a white paper on financial inclusion by Ernst & Young, the regulator said that there is need to develop low-cost distribution models along with low ticket insurance policies and not as adjuncts to micro finance programs. Meanwhile, Irda is also looking at an ?everything or a single product? for the low-income groups focussing on life, health and loss of assets. The regulator had come out with a draft for standard product for rural and social sector last year. ?We had a final round of discussions on this standard product and have approached the Life Insurance Council for its deliberations,?? Narayan added.
These products would be mainly single premium products to address all risk for the rural and social sector needs and would become an obligatory product for all the life insurance companies, similar to the banks, he added.
The standard insurance product was primarily designed for policy holders in rural areas with both life and non-life cover. According to Irda, the standard product was aimed to be the primary instrument for fulfillment of the rural and social obligations of insurers under the Insurance Act. After the initial round of discussions with the council, the regulator has proposed that sum insured will be available at three levels ranging between R1 lakh and R3 lakh.
The idea behind the proposal is to eliminate products that provide no real and long-term benefits to policy holders and to ensure enough risk cover for the poorer sections.