An Irdai panel has suggested introduction of daily premium payment policies to deepen insurance penetration in low-income groups. The committee on ‘micro-insurance’ also said the product benefits need to be simple so that they can be easily understood by customers.
It should be clearly spelt out in terms of gives and gets for the customer — that is, what the customer gives and what s/he gets, the panel said in its report. Micro-insurance is specifically intended for the protection of low-income people, with affordable insurance products to help them cope with and recover from financial losses.
The panel has also made a case for ‘goal based savings products’ like those for child education or higher education. On the pricing front, it said reduction in reserve requirement even for a short duration can help in better pricing and may also help in assessing the impact of such products in improving penetration.
There is also a requirement of waiver of stamp duty on micro-insurance plans especially for life insurance policies.
“Option to pay single premium in daily/ fortnightly/ monthly/ quarterly instalments should be allowed.
“Alternatively, customers should be allowed to pay mortality premium in lump sum with remaining premiums to be allowed to be paid in instalment,” it added.
The panel, headed by Suresh Mathur, also said e-KYC process is required to reduce cost and ensure smooth onboarding and claim settlement process. Also, digital signatures should be encouraged for micro-insurance business.
In India, around 29.5 per cent of total population lives below the poverty line. Of these 36 crore people, 10.2 crore live in urban areas while 25.8 crore live in rural areas.
The committee has also recommended introduction of enabling provisions for registration of specialised micro-insurance company through insurance cooperative society. It further suggested that as the ticket size of premium for micro-insurance policies will be very small, regulator Irdai may consider reduction in requirement of present equity capital of Rs 100 crore for the micro-insurance company.