Insurance regulator Irdai on Thursday allowed general insurance companies to design new and customized products for micro and small enterprises for housing, fire and related hazards in its ongoing efforts to increase insurance penetration and provide policyholders a wider choice.
“The move will enable insurance companies to expand existing coverage on standard products by offering innovative add-ons or modifying existing provisions to meet policyholders’ suitability and affordability requirements.” Following the introduction of quality products in this segment in April 2021, such as India Home Protection, India Micro Enterprise Protection and India Small Enterprise Protection, “the Insurance Regulatory and Development Authority (Irdai) said in a statement, adding a circular dated May 12, 2022, The matter was issued.
“Considering the growing demand for new covers in the business fire line, the authorities hereby allow ordinary insurers to design and file alternative products covering fire and related hazards … Such alternative products may be standard product variants and may include already approved ads.” -Ons may delete an existing provision or as part of a base product. However, the definitions and terms used in standard products will be reference points for those terms when used in alternative products as well. Needless to say, the price of the product will be consistent with the risks involved, ”said the insurance regulator.
Irdai further clarified that it does not make any minimum rate mandatory for insurance and reinsurance companies to fix premiums. Irdai observed that policyholders were being persuaded that the burning cost published by the Insurance Information Bureau of India (IIB) was a ‘minimum mandatory rate’. Industry Burning Cost is only a reference point for understanding the experience of fire hazard claims across the industry. This cannot be construed as a minimum mandatory rate set by Irdai, ”it said.
“Insurance companies are also advised to ensure that policyholders and other stakeholders do not have any misinformation in this regard,” it added.