Page 24 - Insurance Times August 2021

micro-finance business growth. However the whole business the failure of the different distribution channel & the
model came crashing down with the collapse of the MFIs operating cost associated with them. It remained a tool for
institutions on 2011-12. The performance of the agencies the fulfilment of the compulsory "Rural / Social" business
were also found lacking. SHGs channel remained non-starter requirement imposed by the regulator. Missing the quota
where lots of complaints were received about the NGOs. could result in an insurer being de-licensed in India. Despite
the quota system, more than half of the respondents with
Taking lessons from the past experience, IRDAI came out the microinsurance portfolios have an in-force premium level
with the new revised regulation in year 2015 & the same is of only 0-2% against their total insurance business portfolio.
still operative. The main highlight of the new regulations
were as follows: Millenium.org conducted a survey of the insurance provider
Y Capacity of building exercises were expanded by
introducing additional 25 hours of training for micro Understanding the support towards microinsurance from the
agents. Licensed to distribute general insurance MSME regulator is relatively very high, because of the compulsory
policies with mandatory refresher training in every quota system was imposed. On the other hand, the
three years. availability of demand of information, reinsurance, support
from technical service providers (TSPs), as well as the
Y Appointment of the Micro agents was expanded
availability of the actuarial data, were rated as medium to
through tie ups with AIC and other health insurers are
also permitted now. low levels of support by most respondents. Despite
significant efforts made by the IRDAI.
Y Minimum number of 5 person from earlier cap of 20
was allowed for group policies
The effectiveness of the quota system remains questionable.
Y Definition of the micro-agents was expanded with The contrast seen between the different drivers in the
inclusion of Regional Rural banks, Primary agricultural operating environment demonstrates the disconnect
and other co-operative Societies, Bank correspondents between government mandate and the appetite of the
of scheduled commercial banks etc. market to supply microinsurance. According to the research
Y Rural and Social Sector in Obligation: Life Insurers are conducted, some of the insurers are dumping
required to cover a certain percentage of the total microinsurance products that are very poorly serviced onto
number of policies in rural areas and to Insure a given customers solely to meet their quota.
number of lives in the social sector.
Outreach / present stage of Microinsurance:
Current status: In spite of good intention & push from the Microinsurance is believed to work as powerful risk
regulator, the micro-insurance portfolio did not achieve its management tool for the low income and to the vulnerable
desired level of performance. One of the key reasons was groups by preventing them from falling into the poverty

Present Dynamics of Inclusive Insurance in India

Insurers' views on the supporting environment for microinsurance in India High Medium Low None

Support for microinsurance from the regulator is: 12 11
Support by the insurance association for MI: 6 11 5 1
Availability of reinsurance to insure the low income segment: 2 2 13 6
Presence of distribution channels that
effectively reach the low income market: 5 9 9
Availability of investment capital for developing microinsurance: 2 14 7
Support for microinsurance product development 2 5 10 6
from Technical Service Providers:
Availability of demand information to support
microinsurance product development: 3 11 9
Availability of actuarial data to help in the technical design: 3 7 13

Number of Insurers
*source: A recent survey conducted by Milliman.org

24 The Insurance Times, August 2021