The Hindu Business Line : `Life, non-life insurers can sell each other's micro-insurance products'

PAVING the way for Indian insurance companies, both life and non-life in the public and private sectors, to explore opportunities in micro-insurance, the Insurance Regulatory and Development Authority (IRDA) has finalised the regulations on micro-insurance.

In a significant move, the insurance regulator has permitted life insurers and non-life insurers to offer micro-insurance products in non-life insurance and life insurance areas, respectively. The life insurer can offer general micro-insurance products and the non-life insurer can sell micro-life insurance cover.

However, a life insurer will be permitted to offer general micro-insurance products only if it enters into a tie-up with a general insurance company and vice-versa. In the event of any claim on a general micro-insurance product, the life insurer who sold the policy has to forward the claim to the respective general insurer it has tied-up with and vice-versa, according to the IRDA Chairman, Mr C.S. Rao.

In addition to the insurance agents, corporate agents and brokers, the regulator has also permitted the distribution of micro-insurance products through micro-insurance agents. However, the micro-insurance agent should not distribute any product other than a micro-insurance product. Non-governmental organisations (NGOs), self-help groups (SHGs) and micro-finance institutions (MFIs) are eligible to become micro-insurance agents. The insurance companies have to appoint micro-insurance agents.

According to IRDA, the micro-insurance agent should not work for more than one insurer carrying on life insurance business and one general insurance player. A micro-insurance agent should employ specified persons with the prior approval of the insurer to sell the micro-insurance products. The corporate agents and insurance brokers procuring micro-insurance business would continue to be governed by IRDA.

Prior to the introduction of micro-insurance products, the insurance companies have to follow the existing `file and use' procedure for filing the products with the regulator. The micro-insurance products cleared by the IRDA should also prominently carry the caption `Micro Insurance Product.'

The regulator has asked insurance companies to ensure that the insurance contracts are issued to policyholders in a simple write-up in regional languages. Insurers have also been told to impart at least 25 hours of training in regional languages to all the micro-insurance agents and their specified persons.

The regulator has specified the norms on remuneration and commission to be paid to micro-insurance agents. In the case of life insurance business, the agents can be paid a maximum of 10 per cent of the single premium for single premium policies and 20 per cent of the premium for all the years of the premium-paying term for non-single premium policies. The micro-insurance agents in the non-life business can be paid 15 per cent of the premium.

For group insurance products, the insurer can decide the commission subject to the overall limit specified.

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