IRDA has asked insurance companies to contribute this on-boarding fund in four installments. The first installment has to be paid before March 31, 2014.
Insurance companies can now start selling policies through Common Service Centres (CSCs) or Sarva Seva Kendra. To use the services of CSCs, IRDA has asked insurers to cough up Rs. 20 lakh as onboarding corpus.
Insurers can fund this money in four installments. The first installment of Rs. 5 lakh should be made before March 31, 2014 and the remaining installments can be paid in the first week of every quarter.
“CSC-SPV on-boarding corpus fund would be set up with an initial contribution of Rs. 20 lakhs from each insurance company, which has entered into an agreement with CSC-SPV for distribution of its insurance products through the CSC-SPV centre. The insurer signing the agreement shall pay the first installment of Rs. 5 lakh towards the corpus fund before March 31, 2014. Further, three installment shall be paid in the first week of the quarter,” states the IRDA circular.
The money collected from insurers will be kept in an escrow account operated by Life Insurance Council. The cost for using one CSC centre is Rs. 5000.
IRDA has clarified that the charges incurred by insurers on premium collection and customer service will depend on mutual agreement of both the parties – insurance companies and CSCs.
In September 2013, IRDA had allowed insurance companies to use licensed Common Service Centres (CSCs) as a distribution network in rural areas in order to increase insurance penetration in the country.
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 is established by the Department of Electronics and Information Technology through National e-Governance Plan (NeGP) in 2006.