New Delhi: A committee set up by the Insurance Regulatory and Development Authority of India ( IRDAI) to suggest measures to promote microinsurance has suggested lowering the capital requirement for standalone microinsurance companies to Rs200 million ($2.7m) from the current level of Rs1 billion so as to accelerate growth in this segment of the insurance market in the country.
The panel says that India will need to attract multiple players if the country wants to substantially increase insurance penetration, reported Press Trust of India.
“This is all the more urgent in the current context of the COVID-19 pandemic when millions of Indians, especially in the informal sector, have lost their livelihoods, are now leading more insecure lives and are falling back into poverty,” the committee said in its report. For low-income families, calamities such as illnesses, accidents, death or the loss of assets often have very grave financial consequences. Such events can push these families deeper into poverty as their meagre resources become depleted.
The report also said, “Microinsurance companies (as well as cooperatives and mutuals) should be allowed to act as composite insurers to transact both life and non-life business through a single entity. Their portfolios should have a balance of both life and non-life business.”
The report suggested too that the IRDAI or the central government could establish a Microinsurance Development Fund to support and promote the growth of such insurance.
The IRDAI formed the committee in February 2020, with members consisting of representatives of non-governmental organisations, independent consultants and other persons having experience of working in financial inclusion and regulatory fields.