IRDAI forms panel to review micro-insurance framework

  • Category
    Economy
  • Published
    10th May, 2019

The Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to review the regulatory framework on micro-insurance and recommend measures to increase the demand for such products.

Context

The Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to review the regulatory framework on micro-insurance and recommend measures to increase the demand for such products.

About

IRDAI and its composition

  • Following the recommendations of the N. Malhotra Committee report (1994), IRDAI was setup as an autonomous body under the IRDA Act, 1999. Its headquarters is in Hyderabad.
  • The committee has been formed in the backdrop of a less- than-desired off take of micro-insurance products despite their inherent benefits. Its market penetration remains low.
  • The 13-member panel comprising officials of the IRDAI, insurers and NGOs is chaired by IRDAI Executive Director Suresh Mathur.
  • The committee has representatives from life, general and health insurance companies in the public and private sectors.

Functions : Section 14 of the IRDA Act, 1999 lays down the functions of IRDA.

  • Regulating the insurance industry and protects the customers
  • Promotion of competition to enhance customer satisfaction
  • Promoting professional organizations in insurance
  • Licensing and establishing norms for insurance intermediaries
  • Lowering premiums for ensuring the financial security of the insurance sector.
  • Specifying financial reporting norms of insurance companies
  • Regulating investment of policyholders’ funds by insurance companies
  • Ensuring the maintenance of solvency margin by insurance companies
  • Ensuring insurance coverage in rural areas and of vulnerable sections of society
  • It will also suggest changes in the distribution structure, if any, including mobile-based and technology driven solutions.

     Micro-insurance Policy:

    • Micro-insurance refers to products offering coverage to low-income households or to individuals who have little savings and is tailored specifically for lower valued assets and compensation for illness, injury or death.
    • Though it promises to support sustainable livelihoods of the poor, its market penetration remains low.
    • A general or life insurance policy with a sum assured of Rs.50,000 or less is covered under micro-insurance policy.

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