More entities may be allowed to sell micro-insurance

The insurance regulator plans to finalise the proposal to allow district central co-operative banks, regional rural banks, primary agricultural co-operative societies and individuals to peddle micro-insurance in rural and semi-urban areas.

This move is aimed at increasing penetration of life, non-life and medical insurance in the hinterland. Individuals who will be allowed to sell micro-insurance include shopkeepers, medical store owners, petrol pump owners and public telephone operators.

The micro-insurance regulations are tailored to encourage insurers to offer affordable insurance products to the rural and semi-urban population with low distribution costs.

Since individuals are already allowed by the Reserve Bank of India to work as banking correspondents (BC) in rural markets, there is a case to leverage on their presence in rural areas to sell micro-insurance. The same holds good for district central co-operative banks, regional rural banks, and primary agricultural co-operative societies, said a senior IRDA official.


However, the official said banks and insurers must beware of the possibility of mis-selling. It (mis-selling) is a concern and we are trying to come up with a solution, he said.

Currently, only insurance company agents, commercial banks, microfinance institutions, non-governmental organisations and self-help groups are allowed to sell micro-insurance policies.

Apart from micro-insurance in the life and health space, the regulator is also looking at promoting products for farmers such as crop and weather insurance. To promote crop insurance, the regulator is planning to allow a micro-insurance agent to have a tie up with Agricultural Insurance Company of India in addition to a life and non-life insurer, said the official

After a series of deliberations with members of the Life Insurance Council, representatives from both life and non-life industries and other stakeholders, the regulator plans to come out with final regulations on micro-insurance.

In the life insurance sub-segment of micro-insurance, the individual new business premium during the financial year 2011-12 stood at Rs 115.68 crore for 46.20 lakh new policies, the group business premium amounted to Rs 109.82 crore covering 1.02 crore lives.

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