IRDA to provide a comprehensive insurance cover to BPL families

In view to expand the reach of insurance cover to Below Poverty Line (BPL) families in the next five years, the Insurance Regulatory and Development Authority (IRDA) has issued a draft proposal.

According to the draft, every insurer has to undertake such percentage of life insurance and general insurance business in these sectors and design specific standard product for this category of population, as may be specified by IRDA. The standard insurance product would be in addition to the government schemes, which provide insurance cover at concessional rates. These standard products should include minimum sum assured of Rs 40,000 for life term cover and up to Rs 2,00,000. The product can be extended to the family members and the period of cover shall be between 5 years and 25 years. The draft further illustrated, “The objective of mandating a minimum percentage cover to these sections was to extend insurance cover to meet exigencies cast by natural catastrophes, accidental death in particular as also a means of protection for the family and some savings to bolster their financial security.” The regulator said a lead life insurer should tie up with a non-life insurer or vice-versa for the benefit of the people. All insurers, during the year 2012-18 are mandated to fulfil at least 50% of the target group through the standard product sales and the remaining 50 per cent may be fulfilled by any other approved rural and social sector products. The draft also said the policy conditions and prospectus should be clear, simple and transparent language should be used without vague statements. In its 'Composite Package of Standard Insurance Product for Rural and Social Sector' IRDA said weaker sections should be provided cover to meet the exigencies cast by natural catastrophes, accidental death, protection means for the family as well as to promote some savings to bolster their financial security. The product will have defined options and levels to provide choice and flexibility to customers in order to cater to individual circumstances. The regulator has invited suggestions from all stakeholders on the draft within 30 days.