Page 14 - Insurance Times September 2020

proximately 2 crore (20 million) fire the MSME sector, only 5 per cent of US, it is around 90 per cent. People
policies issued to MSMES and, hence, the units are insured. "We want to in- suffer huge economic losses when
mandatory cover would be the best crease protection in this segment from some catastrophe happens. This risk
option to start with. The cover would 5 per cent to at least 25 per cent in can be covered by insuring the prop-
also be available on standalone basis in the next couple of years," Khuntia said. erty, as per the insurance regulator.
case the MSME has no fire cover," the On whether the Covid-specific products "Irdai is keen on a standard product for
group recommended. will be in the market for an extended dwelling units as the same product will
They estimated a price of Rs. 1,600- period, Khuntia said, "We will take a be sold by all the companies. It will
2,000 per employee and have pro- call on this at the appropriate time." become easier for policyholders to pick
posed that the premium should com- He also asked the life insurers to focus such products as they don't have to go
mence at Rs. 999 per employee, ex- on their 13th month and 61st month through voluminous policy documents
cluding the goods and services tax, persistency, as it is an indicator of the to find out terms and conditions. Hope-
during the first year with a gradual company's efficiency. Life insurers have fully, more and more people will pro-
annual increase to Rs. 1,596 per em- to ensure their 13th month persistency tect their homes," Khuntia said at the
ployee in 10 years. should not be below 90 per cent, so CII Insurance and Pensions Summit.
that not more than 10 per cent people According to Irdai data, insurance
Standard insurance prod- drop out after the first year, and the companies shelled out an average of Rs
61st month persistency should not be 96,621 per person on claims made by
ucts on the cards below 65 per cent. "The 13th month
The insurance regulator will come out persistency of 90 per cent should be insured Covid-19 patients. Khuntia said
with a series of standardised products achieved within one year," Khuntia that 2.38 lakh claims for coronavirus
to improve coverage in the under-in- said, adding: "Our effort should be to have been filed by the policyholders as
sured segments and increase the adop- come back to the older growth rate of now. Of these, 1.48 lakh claims
tion of insurance products. It is devel- during this year because there is more amounting to Rs 1,430 crore have
oping a standard term product in the need for protection now." been settled by the insurers.
life insurance space, two are in the The insurance watchdog had come out
works in the MSME segment - one for IRDAI working on 2 insur- with standard health products called
micro enterprises and other for small Arogya Sanjeevani and Covid-19 specific
industries - and another for houses will ance schemes for MSMEs, products - Corona Rakshak and Corona
be rolled out soon. another for dwelling units Kavach - two months ago. Under the
"The idea is if a standard product is sold After bringing out specialised insurance Corona Kavach plan, around 28 lakh
by all the companies, it becomes much cover for the Covid-19 pandemic, the lives have been covered since its
easier for the policyholders to pick up Insurance Regulatory and Develop- launch on July 10, 2020.
that product," said Subhash Chandra ment Authority of India (Irdai) is plan- "We will consider extending the tenure
Khuntia, chairman of the Insurance ning to come out with standardised for Covid policies from March 2021,"
Regulatory and Development Author- insurance schemes for dwelling units Khuntia said.
ity of India (Irdai). "It will help indus- and Covid-hit micro, small and medium Irdai said standard products are
tries immensely in case they suffer enterprise (MSME) segment. launched by the regulator to further
losses. If the product works well, then Irdai Chairman Subhash C Khuntia said increase penetration of insurance in
after natural calamities, it becomes two standard schemes are being India, which is just 3.76 per cent of the
much easier for the government to worked out for MSMEs. One is for mi- gross domestic products (GDP) com-
handle the situation because the insur- cro units and another one for small pared to the world average of around
ers are able to compensate for the units. As of now, only 5 per cent of 7 per cent. The regulator is also look-
loss," he said at a CII Insurance event. MSMEs are covered by insurance. In- ing to introduce risk-based solvency for
India is a hugely under-insured country, dia has 6.33 crore MSMEs, majority of insurance companies in the next three
with only 19 per cent of lives insured, which are micro-enterprises. "Another years and allow video-based KYC pro-
while only 36 per cent of the popula- standard product is being worked out cess. Irdai also wants insurers to im-
tion has health insurance. Also, only 0.9 for dwelling units," he said. prove the persistency ratio - or con-
per cent of houses are insured, com- In India, only 0.9 per cent of the dwell- tinuation of policies - for the 13th
pared to over 90 per cent in the US. In ing units are insured whereas in the month and five years. T

12 The Insurance Times, September 2020