The standard insurance product would be in addition to the government schemes, which provide insurance cover at concessional rates
An exposure draft on a standard product for rural and social sector is released by Insurance Regulatory and Development Authority (IRDA) for comments of the public and all the stakeholders. The views, if any, may be sent to in within 30 days from the date of this notification released on 21st September.
To expand the reach of insurance cover to below poverty line (BPL) families in the next five years, the draft proposal said, “Each insurer shall prescribe the target in proportion to their market share. IRDA shall prescribe annual target so as to cover entire BPL population in the next five years.â€
The standard insurance product would be in addition to the government schemes, which provide insurance cover at concessional rates. “This product would facilitate supplementing or topping up of any existing social security benefit and would not overlap with such benefits,” it added.
These standard products should include minimum sum assured of Rs. 40,000 for life term cover and up to Rs. 2 lakh. The products may be extended to the family members and the period of cover shall be between 5 years and 25 years.
In case of micro-insurance and rural & social sector obligations, the standard product shall be offered by the insurers to meet the rural and social sector obligations. The insurers shall not be allowed to market any other product to meet the social and rural sector obligations, which offers either lower benefits for the premiums charged in the standard product or higher premium which offers lower benefits than the standard product for the premium charged.
On distribution mechanism, each state shall be allotted to, two general insurers and two life insurers for offering the standard product. Insurers shall be required to meet at least 75% of their rural and social sector obligations from such allotted State(s) and the remaining 25% of their rural and social obligations from the remaining States.
A Lead life insurer shall issue policies under this standard product and have a tie up with a Lead non-life insurer for the benefit structure. During 2012-18, all insurers shall fulfil at least 50% of the target group through the standard product sales and the remaining may be fulfilled by any other approved rural and social sector products, it said.
The policy conditions and prospectus should be clear, simple and transparent language should be used without vague and ambiguous statements considering the target market, it added.
In its ‘Composite Package of Standard Insurance Product for Rural and Social Sector’ IRDA said weaker sections should be provided cover to meet the exigencies cast by natural catastrophes, accidental death, protection means for the family as well as to promote some savings to bolster their financial security.
The IRDA said it has made the standard product more flexible and simple and aims to provide comprehensive package of insurance covers to these sections. It further said “the product will have defined options and levels to provide choice and flexibility to customers in order to cater to individual circumstances”. It has also invited stakeholders comment on the exposure draft within 30 days.
