IRDAI committee suggests introduction of daily premium payment policies to promote micro-insurance

A committee setup by IRDAI has suggested an introduction of daily premium payment policies to deepen insurance penetration in low-income groups. The committee also said the product benefits need to be simple so that they can be easily understood by customers, and should be clearly spelt out in terms of ‘gives and gets’ for the customer. Micro-insurance is specifically intended for the protection of low-income people, with affordable insurance products to help them cope with and recover from financial losses. The committee has also made a case for goal based savings products like those for child education or higher education. On the pricing front, the Committee said reduction in reserve requirement even for a short duration can help in better pricing and may also help in assessing the impact of such products in improving penetration.

The committee also said e-KYC process is required to reduce cost and ensure smooth onboarding and claim settlement process. Also, digital signatures should be encouraged for micro-insurance business. The committee has also recommended introduction of enabling provisions for registration of specialized micro-insurance company through insurance cooperative society. It further suggested that as the ticket size of premium for micro-insurance policies will be very small, regulator IRDAI may consider reduction in requirement of present equity capital of Rs 100 crore for the micro-insurance company.

Among other recommendations, the committee has said there is a requirement for waiver of stamp duty on micro insurance, especially for life insurance policies. Option to pay single premium in daily/ fortnightly/ monthly/ quarterly installments should be allowed. Alternatively, customers should be allowed to pay mortality premium in lump sum with remaining premiums to be allowed to be paid in installment, it added.