A panel on Micro Insurance (MI) — constituted by the Insurance Regulatory and Development Authority of India (IRDAI) — has suggested introduction of a Combi MI product.

“There is a case to have a Combi MI product which can be developed on a modular basis, giving flexibility to the insurer to offer coverage to different groups and individuals as per their specific protection needs,’‘ the committee, chaired by Yegnapriya Bharath, Chief General Manager (Non-Life), IRDAI said in its report. 

Insurance penetration

“The need of the hour is better penetration of insurance amongst the vulnerable sections of society. A one-stop solution to meet the insurance protection needs of these targeted groups will go a long way in achieving the objective of increasing insurance penetration in these strata of society,” the report said. 

As far as a Combi MI product is concerned, insurers may follow a modular approach using various permutations and combinations, leaving the choice to the proposer. 

“Certain standard products prescribed by IRDAI can be offered as modules, albeit with a restricted sum insured, keeping the target segment in view,” the committee said, while recommending 14 standard modules and suggests the product may be sold by insurers either on an individual or group basis.

While it is necessary to have identified channels of distribution which have been provided for in the MI Regulations, it might be a good idea to permit all other channels also to chip in and widen the reach, it added.

Combi administration

The Combi MI product may be solicited by all distribution channels authorised to distribute insurance products by IRDAI. It may also be sold through the on-line mode, wherever feasible. 

The Underwriting and Servicing of the product can be done through the use of seamless technology with prior agreement amongst a life, general and health Insurer for their respective areas.

An option to ensure uniformity and efficiency in the administration of the Combi product through use of technology is to develop a common technological platform with the involvement of the Life Insurance Council and the General Insurance Council, the committee report said. 

Combining the MI product with various government schemes at the central level and the State level will increase the outreach of the product and also make it easier to convince the target groups about the benefit of insurance protection through the Combi MI product, it added. 

The provision for offering Combi products (though the nomenclature ’Combi product’ has not been used), by permitting a tie-up between a life insurer and a general insurer — which subsumes a health insurer — already exists in the current framework, but has not been given the nomenclature ‘Combo’. However, this option has been on the back burner. A possible reason could be the complexity involved in servicing such a product, which can be a challenging task, especially for distributors of MI products

However, with the panel coming out with clear recommendations on various aspects of micro insurance products, the regulator is expected to come with a clear policy on the segment to spur growth shortly.