Soon, there may be a single micro insurance product to offer life, personal accident and theft insurance to people in the rural areas.
“We have designed this product under advise from experts and referred it to life insurance council for feedback,” Mr J. Hari Narayan, Chairman, IRDA told newspersons on the sidelines of a national conference on financial inclusion — integrating insurance.
The conference was organised by the Associated Chambers of Commerce and Industry. The product would offer little customisation in three premium brackets but the basic structure would be similar, he added. The objective of the proposed product is to make micro-insurance more effective in rural areas.
The regulator had also asked the council to examine the feasibility of introducing the lead-insurer scheme (on the lines of lead-bank scheme) to popularise insurance. Addressing the delegates earlier, Mr Hari Narayan said the lead-bank scheme was successful in achieving financial inclusion targets.
Life-insurance companies which are strong in particular geographies could be lead-insurers in those areas to spread insurance inclusion, he added.
DEFINITION
The regulator is also re-thinking the definition of micro-insurance.
“To my mind, micro insurance is the same as any insurance except that the ticket size is small,” he added.
At present, a micro-insurance product is defined by the benefit it pays out — it should be less than Rs 50,000. The micro-insurance products should be transformed from ‘push' products to ‘pull' products by better service, among others, he added.
SERVICE CHARGES
Microfinance institutions were charging ‘very high' service charge on the sale of micro insurance products as they were being sold as bundled product with loans.
“We have noticed in several cases that the entity offering the loan and hence the micro insurance product, tends to charge a very high rate for this service,” he said. They should not be sold as bundled products, he added.
He also released a study prepared by the Ernst & Young on integrating insurance in financial inclusion.