IRDA has issued a draft proposal with an objective to provide insurance to weaker section of the rural population. Every insurer has to undertake such percentage of life insurance and general insurance business in these sectors and design specific standard product for this category of population, as may be specified by IRDA, said the draft.
“The objective of
mandating a minimum percentage cover to these sections was to extend insurance
cover to meet exigencies cast by natural catastrophes, accidental death in
particular as also a means of protection for the family and some savings to
bolster their financial security,” said the draft.
IRDA shall prescribe
annual target (for both life and general insurer) so as to cover entire below
poverty line (BPL) population. According to the draft, the sum assured is
available in a range from Rs 40,000 to Rs 2 lakh, with multiples of Rs 10,000
and the minimum age at entry for such products would be 18 years and the
maximum age would be 50 years.
For a life cover, the
maximum age for continuation of cover in all cases is proposed at 70 years and
there would not be any exit age for a health insurance cover. Insurers will have only offer standard
product specifically designed for BPL. The players shall not be allowed to
market any other product to meet the social and rural sector obligations except
the specific standard products.
The draft further illustrated that the period of cover shall be offered between five and 25 years in all cases of individual assurances/insurance policies and one-year group renewability covers may be offered to groups. “However, the general insurers shall offer the term as three years, with continuous guaranteed renewability condition for the subsequent three-year periods. If the balance of period is less than three years, general insurers shall renew the policy only for such balance period and shall provide the premium rates at the outset for this balance period of less than three years,” said the draft.
The premium for the base plan with all the add-ons/riders shall not exceed Rs 1,000 to Rs 7,500 per annum. Life and general insurance covers may provide an option to continue the covers even in the event of non-payment of premiums due continuously for a maximum period of two years in a five-year cycle. This is, however, subject to payment of an additional 30 per cent of the annual premium.
For the purpose of distribution, each state shall be allotted two general insurers and two life insurers for offering the standard product. Insurers shall be required to meet at least 75 per cent of their rural and social sector obligations from such allotted state and the remaining 25 per cent of their rural and social obligations from the remaining states.The regulator has invited
suggestions from all stakeholders on the draft within 30 days.