Regulator IRDA has come with a draft proposal to expand the reach of insurance cover to Below Poverty Line (BPL) families in the next five years.
“The target group shall be the BPL population… Each insurer shall prescribe the target in proportion to their market share. IRDA shall prescribe annual target so as to cover entire BPL population in the next five years,” Insurance Regulatory and Development Authority (IRDA) said in its draft.
The standard insurance product would be in addition to the government schemes, which provide insurance cover at concessional rates.
“This product would facilitate supplementing or topping up of any existing social security benefit and would not overlap with such benefits,” it added.
IRDA said a lead life insurer should tie up with a non-life insurer or vice-versa for the benefit of the people.
These standard products should include minimum sum assured of Rs 40,000 for life term cover and up to Rs 2,00,000.
The products may be extended to the family members and the period of cover shall be between 5 years and 25 years.
During the years 2012-18, all the insurers shall fulfil at least 50 per cent of the target group through the standard product sales and the remaining 50 per cent may be fulfilled by any other approved rural and social sector products, it said.
The policy conditions and prospectus should be clear, simple and transparent language should be used without vague and ambiguous statements considering the target market, it added.
In its ‘Composite Package of Standard Insurance Product for Rural and Social Sector’ IRDA said weaker sections should be provided cover to meet the exigencies cast by natural catastrophes, accidental death, protection means for the family as well as to promote some savings to bolster their financial security.
The IRDA said it has made the standard product more flexible and simple and aims to provide comprehensive package of insurance covers to these sections.
It further said “the product will have defined options and levels to provide choice and flexibility to customers in order to cater to individual circumstances”.
It has also invited stakeholders comment on the exposure draft within 30 days.