Page 10 - Insurance Times July 2022

IRDAI weighs allowing ment of India and IRDAI were already picted a huge scope for awareness and
in place since April 1. purchase consideration for these prod-
loans to buy insurance ucts, with cyber insurance being an ex-
The minister, who discussed several
IRDAI is examining a proposal that may ception.
challenging issues which made Surety
allow customers, both retail and cor-
Bond a complete non-starter with the Another remarkable trend observed
porate, to take loans for buying an in-
insurers, proposed to the IRDAI that it here was that nearly 48% of respon-
surance and spread premium payment
should design a model product having dents in tier 2 & 3 cities had bought or
over longer duration. Known as pre-
all the basic features that can be given showed the willingness to buy insur-
mium financing in insurance parlance,
to them for its launch. "The insurers can ance, as opposed to 36% in tier-1 cities.
at present the structure is not available
further improvise the product accord- The results clearly draw a parallel be-
in the country.
ing to their capacity and on the basis of tween growing internet consumption
A senior executive aware of the devel- reinsurance support,'' said the CEO of a in smaller cities of India and starkly simi-
opments said the move is aimed at in- general insurance company, who had lar awareness levels to safeguard that
creasing insurance penetration, reten- attended the meeting. consumption.
tion, reducing protection gap and also A surety bond is provided by the insur-
creating new avenues of consumer and ance company on behalf of the contrac- IRDAI reduces solvency
corporate financing. tor to the entity, which is awarding the
margin
"It is being looked at. Necessary project. When a principal breaks a
IRDAIhas reduced the solvency margin
bond's terms, the harmed party can
amendments will be required in the In- requirement for general insurers pro-
make a claim on the bond to recover
surance Act, for which the government viding crop insurance, a decision ex-
losses.
also needs to be on board," he added. pected to unlock Rs 1,400 crore of funds
Under premium financing, broker or for them to undertake more business.
Tier-2, 3 cities see demand
insurer will offer the retail customer an The decision, Insurance Regulatory and
option to spread the cost of insurance for new-age products like Development Authority of India (IRDAI)
said, is part of series of reforms it has
over a period of instalments rather than cyber insurance: Report
undertaken to increase insurance pen-
to pay a single premium in one lump
There is a great market opportunity for
sum before the policy commences. etration in the country.
new-age insurance products like cyber
In a press release, IRDAI said it has re-
insurance, especially in tier- 2 & 3 cit-
duced the solvency margin requirement
Surety Bonds stuck: IRDAI ies, according to an online survey by
for insurers doing crop business.
Policybazaar.
asked to come up with
"This move will increase the capacity of
The findings showed around 23% of re-
model product general insurers to underwrite more
spondents had a cyber insurance policy
business," it added.
In a bid to break the deadlock over the in place. This represents a significant
launch of Surety Bonds, the Ministry for proportion of cybersecurity coverage in Solvency margin, a key indicator of fi-
Road Transport & Highways (MORTH) has a country like India where the penetra- nancial health of an insurer, refers to
asked insurance regulator IRDAI to de- tion of fundamental products like life the difference between its value of as-
velop a model product on Surety Bonds in and health insurance is still low. sets and liability. Regulator fixes the
consultation with general insurers. solvency margin for insurers.
Policybazaar conducted the survey to
Road Transport Minister Nitin Gadkari closely analyse consumer awareness IRDAI said since fiscal 2017-18, it has
had met the CEOs of some general in- levels and uptake of emerging protec- been relaxing the period of admissibil-
surance companies along with SN tion products in India to observe the ity of premium due from government
Rajeswari, Member-Distribution, and National Insurance Awareness Day for solvency calculation purpose from
acting in charge of Non-life, IRDAI, in 2022. The brand surveyed over 4500 of 180 days to 365 days.
New Delhi to fix some of legal and tech- its customers and app/website visitors "Now, it has been decided to extend
nical hitches that are preventing the regarding relatively lesser-known prod- the above relaxations from FY 2022-23
general insurers from launching Surety ucts including cyber insurance, mental onwards till further orders. This move
health insurance, home insurance and
Bonds, which can replace expensive will improve the solvency status of the
pet insurance.
Bank Guarantees. All macro rules and general insurance industry as a whole,"
regulations as prepared by the govern- The overall findings of the survey de- the regulator said.

10 The Insurance Times, July 2022