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„groups of convenience‟. The insurance regulator IRDA has therefore issued
group insurance guidelines with a view to regulate the approach to be adopted
by insurers in dealing with various groups. Such non-employer groups include:

a) Employer welfare associations
b) Holders of credit cards issued by a specific company
c) Customers of a particular business where insurance is offered as an add-

on benefit
d) Borrowers of a bank and professional associations or societies
The rationale of the group insurance guidelines is to restrict formation of groups
for the sole purpose of availing insurance with advantage of flexible design,
coverage of benefits not available on individual policies and cost savings. It has
been observed that such „groups of convenience‟ have often led to adverse
selection against the insurers and eventually high claim ratios. Group insurance
guidelines by the regulatory authority, thus, help in responsible market conduct
by the insurers. They instill discipline in underwriting by insurance companies
and also in canvassing group insurance schemes by setting up administration
standards for group schemes.

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