The new category of distributors will boost the micro-insurance segment, says industry experts.
IRDA has issued an exposure draft which discusses various ways to boost the micro-insurance segment. It has proposed to expand the distribution base by allowing cooperative banks, regional rural banks, primary agricultural co-operative societies and individuals (shopkeepers, medical store owners, petrol pump owners, public telephone operators) to act as micro insurance agents. Micro insurance products are schemes with low ticket size and targeted towards rural and urban poor.
Industry experts feel that this kind of proposal will definitely help in popularising micro-insurance among the lower income group. "We feel, IRDA is headed in the right direction. But it is still an exposure draft so we also need to look at the final regulations that come out after inputs from industry experts," said Malay Ghosh, Executive Director, Reliance Life Insurance.
"This initiative of the regulator will definitely boost the distribution channel of micro-insurance. Moreover, it will also improve the product offering in this category because the regulator has also asked the insurers to expand the product offering in this category," said a top official from SBI Life Insurance.
IRDA notes a majority of the products offered are basic ones, and mostly term assurance. It has asked insurers to consider diversifying the portfolio of micro insurance products by including savings-linked and health cover features.
Currently, entities like NGOs, Micro Finance Institutions (MFIs) and Self help Groups (SHGs) work as micro insurance agents. IRDA aims to broaden its reach to masses. "Since, these individuals have a physical presence and standing in these specific market segments as those of the existing Standalone Micro Insurance Agents, it is considered that they stand on similar footing along with standalone micro insurance agents," IRDA said.