The Hindu Business Line : Insurers may get leeway on tie-ups for micro products

The Insurance Regulatory and Development Authority will consider allowing insurance companies to have more than one tie-up for the distribution of micro-insurance products. Currently, the IRDA allows insurance companies to tie up with only one bank while the micro-insurance guidelines, released in November 2005, permit a single partnership between life and non-life insurance company for distribution of micro-insurance.

Mr C.S. Rao, Chairman, IRDA, said, "The IRDA will consider making an exception and allow for more than one tie-up in the case of micro-insurance. This would also hold true for bancassurance partnerships, where insurance companies may be allowed to partner with more than one bank."

Life Insurance Corporation had earlier this year requested the IRDA for permission to tie up with all the four public sector general insurance companies at a zonal level.

Mr Rao also said that a few insurance companies had also filed new micro-insurance products with the regulator. He was speaking to reporters on the sidelines of a seminar organised by the Insurance Brokers Association of India.

On the issue of public sector general insurance companies hiking health insurance premium, the Chairman said, "The premiums would have to be revised from time-to-time and if they are justified, IRDA will approve of it. While there is no need for a change every year, we have to factor in a change from time-to-time."

As per Oriental Insurance Company's new rate structure, which came into effect on September 15, health insurance premium for those above 50 years has gone up by more than 100 per cent while those under 20 years will pay slightly lower premium. Mr Rao said that this would encourage young people to buy health insurance at an early age.

With respect to preparation towards a free price regime in the non-life sector, which will come into effect on January 1, Mr Rao said the IRDA would finalise the file-and-use guidelines for products in the next three months and also come out with a code of conduct for insurance companies and brokers.

The Chairman said that the decision to have a pool for third party motor insurance policies had been finalised and that a pool rate would be decided on by the end of October.

The comprehensive insurance Bill (which among other amendments allows for FDI to be hiked to 49 per cent in the insurance sector against the current 26 per cent) will be introduced in the winter session of the parliament, he said.

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