In a bid to push the insurance penetration further in the country, the Insurance Regulatory and Development Authority of India (Irdai) has decided to enlarge its basket of existing standard products by launching solutions for MSMEs,small dwellings and a standard term plan.
The guidelines regarding the standard products for term plans, dwelling and MSMEs will be rolled out soon by the regulator, said Subhash C Khuntia, chairman Irdai, while addressing CIIs 22nd Insurance and Pension Summit on Thursday.
“Protection is a key need right now.The advantages of these standard products will be that they will be sold by all the companies and will become easier for policyholders to buy such products as they don’t have to go through voluminous policy documents to find out terms of conditions. So,hopefully, more and more people will protect their assets through these products Standard products for micro enterprises as well for the small industries will cover losses caused by floods and fire. Further, insurers should also look at job-loss and income loss covers,” he added.
In the recent months Irdai has announced standard health product like Arogya Sanjeevani and Covid-19 specific products—Corona Rakshak and Corona Kavach.that covers hospitalisation due to COVID-19.
Khuntia said that under Corona Rakshak 3.2 million lives have been covered with a sum assured of Rs 1.15 lakh crore.
So far 2.38 lakh claims for novel Coronavirus have been filed by the policyholders and out of these 1.48 lakh claims amounting to Rs 1,430 crore have been settled by the insurers. Under the Corona Kavach plan around 28 lakh lives have been covered since its launch on July 10, 2020.
In 2019, the overall insurance penetration in the country is pegged at 3.76 per cent compared to world average of around 7 per cent
The segment regulator is also looking to introduce the risk-based solvency for the insurance companies in next three years.
The regulator also believes that negative growth seen in the new premiums for insurance industry since March, will improve in the months to come.
“In April, the Indian insurance industry had seen a negative growth, but it has revived continuously. I hope that by the end of September it would be even better. By the end of the year we should wipe out the down-turn in the insurance industry that has happed in the earlier part of this year,” added Khuntia.
The insurance regulator has also urged the life insurers to improve their persistency for the 13th month and 61st month.
Irdai has given a target that the 13th month persistency for a life insurer should not be below 90% and 61st month persistency shouldn't go down below 65%.“Only a handful of insurers are close to these figures.
Persistency is the percentage of policies that have not discontinued paying premiums or surrendered. It can be measured in terms of number of policies or in terms of premium.
The idea is not to exploit policy surrenders but to give more value to customers. For general insurance as well, companies must look at data for repeat purchase of product after the one-year policy period,” said Khuntia.
The IRDAI chairman said that both life and general insurers must prepare a dynamic board-approved business continuity plan to look at the risk mitigation measures that need to be taken during the ongoing Covid-19 Pandemic.
“Risks like cyber security due to remote working has to be looked at. Insurers need to maintain adequate liquidity and cut down expenses,” said Khuntia.