Insurers need to design new products for using this channel.
In order to increase insurance penetration in the country, IRDA has allowed insurance companies to use licensed Common Service Centres (CSCs) as a distribution network in rural areas. The facility will enable both life and non-life insurers to market some categories of retail insurance policies through special purpose vehicle (SPV) network in the rural areas with the help of Rural Authorized Person (RAP) who will act as insurance agents.
CSCs operate in rural areas where there is no access to internet. It provides services like e-governance, education, health, issuance of birth certificates, death certificates, utility payments etc. in remote locations. It works on public-private partnership (PPP) model and implemented by the Department of Electronics and Information Technology through National e-Governance Plan (NeGP) in 2006.
“Insurance companies shall develop insurance products to be marketed exclusively through the CSC model and file such products exclusively with the regulator for approval. The products developed for CSC model should not have the sum assured (per life or risk) exceeding Rs 2 lakh except for motor insurance,” stated an IRDA notification.
Moreover, IRDA has invited applications for issuance of license from existing CSC-SPV with a processing fee of Rs 5000. The insurance regulator said that the licenses will be valid for three years which can be renewed 30 days prior to the date of expiry. The service centres should also need to sign legal agreement with the insurance companies for the selling their products.
Krishnamoorthy Rao, CEO, Future Generali General Insurance said that the major challenge for the industry is to design specific products for the new distribution channel. “Non-life products like agriculture or crop insurance, insurance of animals etc. will now take off in a big way through CSC,” said Krishnamoorthy.
CSC-SPV will have to deploy RAP for the selling insurance policies. RAPs must have minimum educational qualification of matriculation with basic computer knowledge. Also, they should complete 20 hours training from any recognized institute and pass the exam with at least 35% marks.