'ËĘ ÁflÁŸĸĘ∑§ •ı⁄U Áfl∑§Ę‚ Ž˝ĘÁœ∑§⁄UáĘ - IRDA

their future needs, the Authority hasexplored the possibility of introducinga comprehensive standard productcombining both life and non-lifecovers. An exposure draft, to thisextent, was released requestingfeedback from all the stakeholders.The various views expressed by thestakeholders were considered. Manyof them felt that:(i) Linking with Government schemes is agood idea by way of supplementing ortopping up of any social securitybenefit and not to overlap suchbenefit, this will increase penetrationof insurance.(ii) To keep a basic product and price. Restof the features can be offered by wayof riders.(iii) To focus on customers who are in lowincome. The middle income andabove customers in rural segment candecide what they want to buy, whydefine choice for them.(iv) Implications of such long cover forgeneral insurance products to beexamined as the general insurancecompanies may have to operate as lifeinsurers and recommended amaximum of 3 year cover.(e) Some also perceived that the productis too restrictive and does not offersufficient options/ choices andflexibility and that the insurers shouldbe allowed to adopt their ownunderwriting norms based on the riskassessment. Imposing specificunderwriting requirements in Rural &Social sector may restrict penetrationand coverage.(f) Considering the responses received,the Authority has made the standardproduct more flexible and simple andis also aimed to provide acomprehensive package of insurancecovers relevant to persons belongingto economically weaker sections inrural and urban areas. The standardproduct, apart from the Governmentsponsored insurance schemes, isaimed to be the primary instrumentfor fulfillment of the rural and socialobligations of insurers under theInsurance Act. The product will havedefined options and levels to providechoice and flexibility to customers inorder to cater to individualcircumstances. The target group shallbe the BPL population as per planningcommission definition. Each insurershall cover the target in proportion totheir Market share. IRDA shallprescribe annual target so as to coverentire BPL population in the next 5years.2. Micro-Insurance and Rural & SocialSector Obligations:(a) The standard product shall be offeredby the insurers to meet the rural andsocial sector obligations. The insurersshall not be allowed to market anyother product to meet the social andrural sector obligations, which offerseither lower benefits for thepremiums charged in the standardproduct or higher premium whichoffers lower benefits than thestandard product for the premiumcharged.(b) The above condition shall not beapplicable to Government sponsoredinsurance schemes.3. Linking with the GovernmentSponsored Insurance Schemes:(a) This product would facilitatesupplementing or topping up of anyexisting social security benefit andwould not overlap with such benefits.Insurance products offered to ruraland social sector shall be structured asbelow:(i) Where Government sponsoredinsurance schemes are being offeredin the specific geographical areaallotted to the insurer, thegovernment sponsored cover shall beconsidered as the basic layer.(ii) Such Government sponsoredinsurance schemes shall beconsidered as basic layer irrespectiveof the insurer who is offering suchGovernment Sponsored Insuranceschemes.(iii) In such cases, the next layer shall bethe standard product to be offered tothe rural and social sector in that areaand may be offered to those who arewilling to have insurance cover overand above the first layer.(iv) In these cases, a deductible equivalentto the sum insured of the basic layershall be applied to all identical riskcovers being offered in both layers.(v) Where identical Governmentsponsored cover is not being offeredin the specific geographical areaallotted to the insurer, only thestandard product shall be offeredtowards rural or social sectorobligation and shall be considered asthe first layer. In all such cases, thereshall not be any deductible applied.(vi) If subsequently, Governmentsponsored insurance schemesbecome operational in these areas,point no. i & ii shall becomeoperational from the subsequentrenewal date/ next policy anniversary.The insurer shall clearly indicate, atthe outset of the contract, thepremium with deductible andpremium without deductible andthese rates shall be applicablesuitably.4. Distribution Mechanism:a) Each State shall be allotted to, twogeneral insurers and two life insurersfor offering the standard product.Insurers shall be required to meet atleast 75% of their rural and socialsector obligations from such allottedState(s) and the remaining 25% oftheir rural and social obligations fromthe remaining States.b) The criteria adopted to allot the Statesto the insurers may be based on themarket share of the insurer in thatState.irda journal October 201217