The insurance regulator would allow tie-ups between life- and non-life insurance companies to make micro-insurance products available to the rural poor through a single window, TK Banerjee, member, Irda said on Wednesday. Mr Banerjee was addressing a seminar on IT as a strategic partner for the emerging insurance industry: Key applications and risk management solutions organised by Asia Insurance Post and presented by The Financial Express.
Mr Banerjee said Irda was likely to come up with regulations on micro-insurance over the next two-three months.
We will relax conditions prescribing a minimum 100 hours of training for insurance agents only for distribution of mirco-insurance products, he added.
Many life insurance companies are still tapping only urban and semi-urban areas, while insurance penetration in the rural areas remained low, he said.
Currently, the regulator was not insisting on a quota for branches in rural areas, but if the same trend continued (of low presence in rural areas) then it would be forced to rethink its stance, Mr Banerjee said.
We wiIl ask life insurance companies to open branches in rural areas so that the spread in the entire geographical area is ensured, stated Mr Banerjee. The regulatory body would also issue strict norms for unit-linked insurance plans (ULIPs) to curb the practice of insurance companies deploying all their funds of ULIPs in the capital market, he said. We may make it mandatory for life insurance companies to offer cover worth four times the annual premium for unit linked policies, he said. The guidelines are expected to be ready in two-three weeks, he added.
Some of the existing ULIP schemes of life insurance players do not meet the norms and they would have to be phased out after the new guidelines are put in place, he said. However, the proposed norms would not apply to pension plans offered by insurance companies.
On the price war in group insurance markets, Mr Banerjee said the Authority has circulated a concept paper among the insurers and would like to make suitable changes after comments from the insurers. After opening up of the insurance sector, the per capita insurance premium has gone up to Rs 750 in 2004 from Rs 300 in 2000, he added. Other speakers at the seminar included SV Mony, secretary-general, Life Insurance Council, KC Mishra, director, National Insurance Academy, Dalip Verma, managing director and CEO, Tata AIG General Insurance and FE editor Mythili Bhusnurmath.