Insurance regulator Irdai on Thursday allowed general insurance companies to design new and customised products for dwellings, micro and small enterprises for fire and allied perils in its continuous endeavour to increase insurance penetration and provide a wider choice to policyholders.
“This move will enable insurance companies to broaden the coverage already provided in the standard products by offering innovative add-ons or varying the existing provisions to meet the needs of the policyholders in terms of suitability and affordability. This comes after the introduction of standard products in this segment, namely Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha amd Bharat Laghu Udyam Suraksha in April 2021,” Insurance Regulatory and Development Authority (Irdai) said in a release, adding a circular dated May 12, 2022, was issued in this regard.
“After considering the increasing demand for new covers in the fire line of business, the Authority hereby permits general insurers to design and file alternative products covering fire and allied perils…Such alternative products may be variations of the standard product and may include already approved add-ons as part of the base product or may delete an existing provision. However, the definitions and wordings of terms used in the standard product shall be the reference point for those terms when used in the alternative products as well. Needless to add, the pricing of the products shall be commensurate to the risks involved,” the insurance regulator said.
Irdai has also clarified that it does not mandate any minimum rate for premium setting by insurance and reinsurance companies. “It has come to the notice of Irdai that policyholders are being led to believe that the Burning Cost released by Insurance Information Bureau of India (IIB) is ‘minimum mandated rate’. Industry Burning Cost is only a reference point to understand claims experience in fire perils across the industry. It is not to be construed as a minimum mandated rate laid down by Irdai,” it said.
“The insurance companies have also been advised to ensure that there is no misinformation to policyholders and other stakeholders regarding the same,” it added.