THD NewsDesk, Hyderabad: The Insurance Regulatory and Development Authority of India (IRDAI) will be emerging with a range of regulated commodities for several sectors so that a stable outcome in each section can be expanded remarkably. It promotes an ordinary term product in the life insurance domain, with two libations in the Micro Small and Medium Enterprises (MSME) division first for micro-enterprises, secondly for small industries. Moreover, a regular commodity for housing units will be introduced shortly.
IRDAI Chairman Subhash Chandra Khuntia at a CII Insurance event, said, “The idea is if a standard product is sold by all companies, it becomes much easier for the policyholders to pick up that product.”
He also added, “We are planning to come out with standard products for both micro-enterprises and small industries so that coverage improves. It will help these industries immensely in case they suffer losses. We are envisaging that if the product works well, then after natural calamities like flood, cyclones, it will be much easier for the government to handle the situation because the insurance companies will be able to compensate for the loss.”
India is an extensively under-insured nation. Only 19% of lives are insured. In the health sector, 36% of lives are guaranteed. Among those, 3/4th is certified by government schemes, and the rest 3.2% have personal health plans. Further, 5.4 % have received group health. Hence, 62% of the total health expenditure is deducted from the pocket. Besides, 0.9% of houses are underwritten in India. While in the US, housing units savour more than 90% of the cover.
In the case of vehicles, third party insurance is mandatory.
- 79% of four-wheelers are covered,
- 66% of four-wheelers are insured for own-damage solely.
It is aggravated for two-wheelers, as 36% of vehicles are insured under the third-party while 39% are covered for their damage.
Under the MSME sector, merely 5% of the units are protected in the country. This sector requires a broader level of protection. Khuntia added, “The regulator is coming out with two standard products in this segment; one for micro-enterprises and another for small industries. We should increase protection in this segment from 5 per cent to at least 25 per cent in the next couple of years.”
Before this, the regulator has turned out a regular health product – Aarogya Sanjeevani, supporting 1.65 lakh lives. On July 10, the regulator started two corona products – Corna Kavach and Corona Rakshak, which guarded around 32 lakh lives, with a premium accumulation of Rs 482 crore total sum insured of Rs 1.1 trillion.
Currently, 2,38,560 corona related appeals have been registered and ultimately settling 1,48,298 claims. Chairman said, “Hopefully after the pandemic reaches a peak, we will see a reduction in the number of claims. But the health insurers are fully equipped to deal with this.”
With no signs of any decline in the number of COVID cases, there is still uncertainty regarding the timespan of the corona specific products in the market. Khuntia regarded, “When we brought it out, we were hoping that it would not be needed for too long. But now it appears that COVID will be there for some time more and at the appropriate time we will take a call on this”.
Khuntia added, “Only a handful of insurers are close to these figures. And I would urge all the life insurers to move towards this target at the earliest, particularly the 13th-month persistency should be achieved within a period of one year.”
He also demanded the life insurers concentrating on their 13th month and 61st-month persistency, as it is a manifestation of the company’s competence. Life insurers should comprehend that their thirteenth-month tenacity should not be below 90%. While 61st month persistency should not be below 65%, not more than 10% of people should terminate after the first year.
He further added, “Our effort should be to come back to the older growth rate during this year because there is more need for protection now and we must work in a counter-cyclical manner to provide protection to the general population and the economy.”
The insurance industry experienced a restraint due to the pandemic and lockdown. 19% of the growth of the sector had declined in April. However, it recovered by August-end and showed a positive increase of 2.4% in the insurance industry compared to the corresponding period last year. Life insurers have measured an accurate growth rate of 2%, and non-life insurers have noticed a 3.6% growth.