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Insurers get IRDAI nod to design customised products

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Money & Banking

The insurance regulator allows insurers to design products for dwellings, MSMEs for fire and allied perils

In order to increase insurance penetration and provide a wider choice to policyholders, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to design new and customised products for dwellings, micro and small enterprises for Fire and allied perils. 

The regulator has issued a circular in this regard. “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,” IRDAI said in a release. 

The move by the regulator comes after the introduction of standard products in this segment, namely Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha in April 2021. 

IRDAI has clarified that it does not impose any minimum rate for premium setting by insurance and reinsurance companies in order to provide clarity to insurers.

Burning cost

“It has come to the notice of IRDAI that policyholders are being led to believe that the burning cost released by the Insurance Information Bureau of India (IIB) is ‘minimum mandated rate’. Industry burning costs are only a reference point to understand claims experience in fire perils across the industry,” it said. 

The burning cost should not be construed as a minimum mandated rate laid down by IRDAI. A circular confirming the same has been issued, reiterating to the insurance companies the purpose of publishing the industry’s burning cost by IIB. 

The regulator has also advised the insurance companies to ensure that there is no misinformation to policyholders and other stakeholders in this matter. 

Published on May 13, 2022

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