The Insurance Regulatory and Development Authority (IRDA) may come out with regulations pertaining to micro-insurance sector in the next one month.
According to P. Nandagopal, Managing Director and Chief Executive Officer, IndiaFirst Life Insurance Company Ltd, when approved, these products would be available in the market from April.
The proposed regulations will address issues pertaining to the micro-insurance sector both on product and distribution front.
“A standardised product is required for the micro-insurance as this will help prevent miss-selling and bring in transparency. The product is likely to be designed in a way so as to be able to address both life and non-life needs of a customer,” Nandagopal told newspersons on the sidelines of an insurance seminar organised by CII here on Tuesday.
Members from the Life Insurance Council, representatives from both life and non-life industries and other stakeholders have held three meetings with the regulator so far during this year pertaining to the micro-insurance sector. “We have made our presentation and we hope the IRDA will issue the guidelines in another one month,” he said.
The insurance regulator had earlier said that it would allow cooperative banks, regional rural banks, primary agricultural co-operative societies and individuals (shopkeepers, medical store owners, petrol pump owners, public telephone operators) to act as micro-insurance agents to bring down distribution cost.
“Pricing is a challenge that is why the regulator is devising ways to reduce the distributional cost which accounts for more than 30 per cent of the premium cost in the industry. If the distributional cost comes down, the premiums could be affordable,” he said.
Distribution tie up
IndiaFirst Life, which is currently dependent on bancassurance network for the distribution of its products, plans to develop alternate channels.
“Close to 80 per cent of our business currently comes through bancassurance network. We want to increase the share of alternate channels to 50 per cent in the next few years,” he said.
The company is set to enter into a tie up with CSE Capital Markets Ltd (CCMPL), a subsidiary of Calcutta Stock Exchange Ltd.
CCMPL has close to 25 people who have been certified by the Insurance Regulatory and Development Authority for selling insurance products, he said.