IRDAI panel suggests ‘micro insurance’ modules for low-income group, small businesses

A committee appointed by regulator IRDAI has suggested over a dozen low-cost “micro insurance” modules with a view to expand protection plans for uncovered population and small businesses. The committee has suggested that the insurers should be allowed to adopt a modular approach using various permutations and combinations for Combi MI (Micro Insurance) products.

‘MI’ aims to protect low-income people with insurance products that are affordable. The objective of MI is to empower people to cope with and recover from common risks such as death of the breadwinner, paying for treatment of serious illnesses, reconstructing destroyed homes and businesses, among others.

A one-stop solution to meet the insurance protection needs of these targeted groups will go a long way in achieving the objective of increasing insurance penetration in these strata of society, the panel said in its report.

“There is a case to have a Combi MI product which can be developed on a modular basis, giving flexibility to the insurer to offer coverage to different groups and individuals as per their specific protection needs,” the report said.

The panel has recommended 14 standard modules and suggested that such products may be sold by insurers either on individual basis or group basis. Insurers, it said, may follow a modular approach using various permutations and combinations, leaving the choice to the proposer.

Certain standard products prescribed by the Insurance Regulatory and Development Authority of India (IRDAI) can be offered as modules, albeit with a restricted sum insured keeping the target segment in mind.

“It is recommended that the Combi MI product may be solicited by all distribution channels authorised to distribute insurance products by IRDAI. It may also be sold through the online mode, wherever feasible,” the report said.

The panel has also suggested a maximum sum insured for each of the modules recommended by it. These include, Rs 5 lakh for ‘Saral Jeevan Bima’, Rs 5 lakh for ‘Bharat Griha Raksha Policy’, Rs 10 lakh for ‘Bharat Sookshma Udyam Suraksha’, Rs 3 lakh in case of personal accident and Rs 2,000 per day for 30 days in a year towards hospital expenses.
“Ideally, every insurer ought to offer the Combi product,” the report said.

The committee was of the view that combining the MI product with various government schemes at the Centre as well as state levels will increase the outreach of the product, and also make it easier to convince the target groups about the benefit of insurance protection.

The panel suggested that one of the options to ensure uniformity and efficiency in the administration of the Combi product through the use of technology is to develop a common technological platform with the involvement of the Life Insurance Council and the General Insurance Council.

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