The Hindu Business Line : Composite insurance may soon be a reality

The Insurance Regulatory and Development Authority (IRDA) is currently toying with the idea of allowing insurance companies to issue composite policies for micro-insurance.

In India micro-insurance is defined by the size of the policy (Rs 5,000-Rs 50,000 sum assured) and covers health, household, fire and motor insurance portfolios that are non-commercial or of lower asset value.

In what could be considered the integration of life and general insurance, the IRDA will soon issue broad guidelines authorising composite products for micro-insurance, said an IRDA source.

Composite products: As per the new regulation, individual companies will now be allowed to design composite products within broad parameters. They will be branded as micro-insurance products for `file and use'. A single agency system can sell these packaged composite products.

Currently, only in the case of health insurance, a life insurance company can purchase a health rider from a general insurer and attach it to its base product.

The new micro-insurance regulations on the anvil allow cross-selling of insurance products by life and general insurance products.

According to analysts, the introduction of a composite product with a life and general insurance component, would further cement the tie-up between life and general insurance companies.

Tie-ups with LIC: Though the proposed micro-insurance regulation is being awaited, the four public sector general insurance companies are keen on tying up with LIC in the area of micro-insurance.

Mr M. Ramadoss, Chairman and Managing Director, Oriental Insurance Company, said it was interested in tying up with LIC.

Oriental Insurance has started profiling its agents for the selling of micro-insurance.

The company also plans to increase its agency force from 30,000 to 50,000 by the end of the year.

Pricing: With respect to the pricing of micro-insurance products, Mr Ramadoss said, "The pricing system will develop over time, especially since a de-tariffed market is coming into place. The issue one needs to consider is how one can integrate a long-term life insurance policy with a general short-term insurance product."

A senior official at LIC said that the opportunity of a tie up with a general insurance company was being keenly pursued.

"Compared to the non-life business, the agency force is the strength of a life insurance company and could be leveraged in case of a tie up.

Mr M.K. Garg, Chairman and Managing Director, United India Insurance Company, said that marketing a composite product would be easier.

"We are in talks with several life insurance companies including LIC though we are still awaiting the micro-insurance regulation to come into place."

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Intense wet session in South; `low' brewing

MS chalking out retail strategy

Seek Parliamentary nod before divesting stake in Navaratna PSEs: Experts

Bank stocks see rising FII interest

Cash in hand is better than two stocks

Undertone remains sketchy

Draft gas pipeline policy put on hold

Composite insurance may soon be a reality

Cos plan to raise Rs 5,000 cr from primary market
Bank of Baroda, Triveni Engg, Punj Lloyd among big issues

Online shops upbeat on festive season biz