Life companies to sell micro insurance products

Saturday 26, November, 2005 In order to reach to the much neglected rural areas and the other under privileged people, Insurance Regulatory and Authority Development has given its nod to issue micro-insurance products. These products are basically small premium policies that range between Rs 5000 to Rs 50,000. It includes health, household, fire and motor insurance portfolios. In this relation, the government has issued certain guidelines wherein the insurers can sell hybrid life and non-life products. The microinsurance products are subject to a much more liberal norms and also the trainings that will imparted to the agents is very relaxed in nature. The microinsurance guidelines contain details on the number of hours needed for the training, which is 25 hours, minimum sum insured and even the agency commission. Not only this, the insurance watchdog will approve each microinsurance product. Under this policy, the insured is covered for both life and non life insurance. However, the life and non-life companies will underwrite the primary risks. According to the notification issued by the IRDA, an agent dealing in microinsurance is described as non-governmental organization; self help group or a micro finance institution. In order to regulate its proper functioning, IRDA has fixed a maximum limit on the sum insured. For instance, the maximum cover that can be offered for property insurance is Rs 30, 000. Whereas for health and life, the limit ranges from Rs 30, 000-50, 000. The maximum commission that is offered under life insurance covers ranges from 10% for single premium policies, to 20% for regular premium policies. The commission for non-life products cannot exceed 15%. The microinsurance agent cannot acquire a similar agency with a rival company once it has become an agent of a particular life or non-life company.

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