Radhika Menon

Mumbai, Dec. 2

PRIVATE insurance companies have started designing composite micro-insurance products combining life and general insurance covers.

One of the first insurers to announce the plan for the new product, to be filed under the new IRDA regulations for micro-insurance, is Bajaj Allianz.

As per the new microinsurance regulation, life and general insurance companies can tie up to offer composite products.

Mr Sam Ghosh, CEO, Bajaj Allianz Life, told Business Line that the company and its general insurance counterpart will jointly offer a composite micro-insurance product that will be filed for IRDA approval in 5-6 weeks.

"The product will combine property, cattle, health as well as life insurance in a single product," said Mr Ghosh.

Health insurance will be offered as reimbursement-based cover. Mr Ghosh said, "Microinsurance is a little difficult to administer since we are not physically present in the rural areas and have to rely on our tie-ups with NGOs. Hence, for smaller claims up to Rs 2,000 we will not insist on invoices." The product will have a premium of up to Rs 500, he said.

The company will enter into more tie-ups with NGOs for distribution of this product.

The company's current product portfolio is tilted towards unit-linked insurance plans (ULIPs), which account for 85 per cent of the business. Bajaj Allianz Life plans to launch more ULIPs directed towards the high-end segment. "Keyman policies do not hold an appeal because as per the regulation we can sell only term policies. We, therefore, plan to launch two ULIPS (single and regular premium) for the high-end segment," he said.

The company's strategy is to boost its presence in small towns. The company currently had 45-50 per cent of its business from smaller towns, said the CEO.

"We hope a bigger distribution network will give us an extra edge. By January 15, we will have 600 offices across the country. Our agency force, which stands at 75,000, is the largest in the private life insurance segment," he said.

Bancassurance contributes 25 per cent of the business and the company is hoping to increase the premium generation from this channel. It will be tying up with 6 more co-operative banks and other distributors of financial products.

Mr Ghosh said Bajaj Allianz Life had set a target of Rs 2,000 crore of new business premium by the end of the current fiscal.

The first year premium till September this fiscal was Rs 643 crore.

(This article was published in the Business Line print edition dated December 3, 2005)
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