Standard insurance products on the cards

The insurance regulator will come out with a series of standardised products to improve coverage in the under-insured segments and increase the adoption of insurance products. It is developing a standard term product in the life insurance space, two are in the works in the MSME segment – one for micro enterprises and other for small industries – and another for houses will be rolled out soon.
“The idea is if a standard product is sold by all the companies, it becomes much easier for the policyholders to pick up that product,” said Subhash Chandra Khuntia, chairman of the Insurance
Regulatory and Development Authority of India (Irdai). “It will help industries immensely in case they suffer losses. If the product works well, then after natural calamities, it becomes much easier for the government to handle the situation because the insurers are able to compensate for the loss,” he said at a CII Insurance event.
India is a hugely under-insured country, with only 19 per cent of lives insured, while only 36 per cent of the population has health insurance. Also, only 0.9 per cent of houses are insured, compared to over 90 per cent in the US. In the MSME sector, only 5 per cent of the units are insured. “We want to increase protection in this segment from 5 per cent to at least 25 per cent in the next couple of years,” Khuntia said.
On whether the Covid-specific products will be in the market for an extended period, Khuntia said, “We will take a call on this at the appropriate time.”
He also asked the life insurers to focus on their 13th month and 61st month persistency, as it is an indicator of the company’s efficiency. Life insurers have to ensure their 13th month persistency should not be below 90 per cent, so that not more than 10 per cent people drop out after the first year, and the 61st month persistency should not be below 65 per cent. “The 13th month persistency of 90 per cent should be achieved within one year,” Khuntia said, adding: “Our effort should be to come back to the older growth rate during this year because there is more need for protection now.”