A working group set up by regulator IRDAI has underlined the need for standard insurance products to cover risks associated with various facets of retail engineering.
The Insurance Regulatory and Development Authority of India (IRDA) had set up the working group in November last year to revisit the existing engineering insurance products (retail) and recommend new suitable standard products in line with advancement in technology for the retail segment.
The working group has submitted its report in which it has made various recommendations related to retail engineering products and also recommended certain standard covers to meet the needs of retail customers, IRDAI said on Thursday while inviting comments on it from stakeholders by May 20.
As per the report, the group has suggested simplification of policy wordings, in addition to a standard format and structure for the policy documents.
It said that better clarity of coverage, terms, and conditions in the policy document would help in "realigning the industry to meet customer expectations better and vice versa."
The existing engineering product (tariff) wording developed almost two decades back, although comprehensive in nature, did not undergo revision or refinement in line with rapid innovations and developments, said the report of the working group (WG).
WG members felt that retail policyholders / customers were often unaware of the covers to be opted, the report said.
On sum insured definition for retail segment for engineering products, it said: "Considering a near unanimous view from all stakeholders, WG suggests Sum Insured limit of up to Rs 50 crores is recommended for retail segment".
The group, as per the report, opined that the retail products with standard wordings with uniform coverage of a good range of essential covers are needed to give a comprehensive protection boost to the SME and MSME sector entities and units.
The products should be offered by all Indian insurers without any changes or modifications, it said.
The panel has also suggested a separate section containing major precautions to be observed by insured, like immediate intimation in case of address change and increase in sum insured.
Modern engineering insurance in India has its roots in the British era and later industrial development during late 20th century. Post-Independence, the engineering classes of business were limited to commercial entities like industrial houses and contractors.