Micro Insurance
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Micro Insurance

IRDA - More on Micro Insurance

The micro-insurance portfolio has made steady progress. More life insurers have commenced their micro-insurance operations and many new products are being introduced every year. The distribution infrastructure has also been considerably strengthened and the new business has shown a decent growth, though the volumes are still small.
Micro-insurance business was procured largely under the group portfolio. Life Insurance Corporation of India (LIC) contributed the most both in terms of policies sold and number of micro-insurance agents.
With the notification of the IRDA (Micro-insurance) Regulations 2005, by the Authority, there has been a steady growth in the design of products catering to the needs of the poor.
The flexibilities provided in the Regulations allow the insurers to offer composite covers or package products. Insurance companies are now offering already approved general insurance products as micro-insurance products with the approval of the Authority, if the sum assured for the product is within the range prescribed for micro-insurance.

Products Available In The Market And Their Features

Category of Products: Endowment/ Savings/ Pension

Features:
Under this category, there is life protection, both on survival and death. Pension can also be built into the product. Some Insurers offer accident benefit and permanent disability benefit during the premium paying term only, or for the full term. The sum is capped between Rs 30,000 and Rs 50,000. A majority of the insurers offer policies under the non-medical scheme and automatic acceptance if size of  the group is more than 200 members.
It is possible to offer an automatic cover facility after two years of premium payment. A policy bond is given and administration is done through a micro-insurance agent.

Exclusions:
Some Insurers may exclude the risk coverage for the first 45 days. Suicide during the first year is covered to protect the third party interest/ refund of premiums, excepting in the case of some insurers.

Prospects:
While it is popularly sold as an individual policy, Group Endowment is currently being issued by some Insurers for economically weaker sections.

Capping:
Insurers are allowing a maturity age of up to 60 years, capping premium payment up to 45/ 50/ 55 years under different modes of premium payment, including monthly payment with the maximum term being 10/ 15 years.

Freelook Cancellation:
Insurers are offering a free look cancellation during the 30/ 15 days period, after receiving the policy bond. Most of them are giving a 30 day grace period. All are giving liberal surrender values after 1/ 2/ 3 years.

Category of Products: Protection (Term insurance)

Benefits:
Life risk with accident benefit, is generally being offered under term products. A majority offer accident benefit and some offer permanent disability benefit too under term products.

Capping:

No one is paying any Bonus in addition to the sum assured. The sum assured is capped between Rs 5,000 and Rs 50,000 or is defined as 100 times the annual premium. Some are giving refund or more than 110% of premium at maturity under term products. Others are not giving any maturity value. Majority are offering under non-medical scheme. Automatic acceptance if size of the group is more than 200 members.

Refund of Premium:
Most insurers are giving a refund of premium in case of suicide during the first year. Some entertain a refund for Single premium cases only.

Terms of Product:
While majority offer one year term, some are offering 5/ 10 year terms under Group product.

Term of Policy:
Insurers offering Individual Term are offering 3/5/10/15 (premium paying term restricted to 10 years) year policies. Majority are allowing different modes of premium payment, including Monthly and Yearly premium.

Freelook Cancellation:
Insurers are offering a Free look cancellation during the 30/15 days period after receiving the policy bond. Majority are giving a 30 day Grace period. Revival eligibility varies between 6 months to 2 years.

Category of Products: Health

Benefits:
Disability, hospitalisation, loss, etc Popular format of Health insurance cover is a fixed sum in case of the hospitalisation (Pre, during and Post). Generally, benefits are 150 Rs/day hospitalisation expenses, consultant fee up to  Rs 4500/hospitalisation, diagnostic expenses up to Rs 4500/hospitalisation, transportation expenses Rs 350 per hospitalisation. One overall limit for hospitalisation may be defined as Rs 15,000 and overall sum Insured for one year defined as Rs 30,000. Group products with discounts offered to the members/clients of MFIs and NGOs and to specific sections of the population (such as all the BPL families in a state).

Condition:
Entire family needs to be covered under one Sum Assured, any number of times.

Category of Products: Property

Coverages:
Mainly for Rural and Urban poor. Making good damage cover/loss/ input costs/ recurring costs due to natural causes/theft/accidents/burglaries/cover against diminished agricultural input/loss due to electrical/mechanical break down.

Key Risks:
Key risks faced by low-income households like package cover and crop insurance product. Loss to livestock due to death, disease and accident dwellings – Fire policy for dwellings and contents Breakdown of agricultural implements cover for poppy/crops against inadequate/variation in fall/variations in different weather parameters. Limit based risk cover or on case by case basis.
Actual  loss/market value whichever is less is reimbursed in case of Live Stock all indigenous, cross bread animal/birds defined Submersible/non-submersible Pump set up to 25/30 HP defined Building (Structure) / contents (belongings)/both defined.

Exclusion:
Loss of life due to accident/diseases even in case of epidemics.
 
Category of Products: Personal Accident
Target Prospects:
Low income groups/Kissan Credit card holders/girl child parents/married ladies.

Coverages:
Death/Permanent Total Disablement/Total and irrecoverable loss of limb/eye sight Medical expenses during/pre/post hospitalisation Percentage of Sum Assured on case by case basis entire family is covered under one Sum Assured any number of times All fees for surgeons/anaesthetists/consultants/associated expenses of hospitalisation under one Sum insured Parent of girl child /women covered with beneficiary as the girl child/insured women for death/PTD/ Total and irrecoverable loss for a limit.

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