Page 10 - Insurance Times October 2020

I IRDAI NewsRDAI News
I IR
D
I
A
IRDAI News
e
N

RDAI News
s
w

Colour codes for health "green" if it attains a score of 2 or less. middle-income economic backgrounds,

insurance plans Similarly, a product with an orange it added.
code means it has a score more than
IRDAI is going to introduce colour codes 2 but less than or equal to 4, while a The micro-insurance sector has only
covered 9 per cent of the overall popu-
for all individual health products that product with a score greater than 4 lation and 14.7 per cent of the poten-
will enable the customers to understand and less than or equal to 6 will be as- tial micro-insurance market size in the
the complexity of plans. According to an signed red. country. "Compared to this, around
exposure draft released by IRDAI every 500 million people need to be covered
health insurance product offered by IRDAI panel proposals for
general and health insurance compa- micro-insurers by micro-insurance. This large gap ex-
ists as most insurers in India have been
nies will disclose on their websites focused on the low-hanging fruit which
colour codes. The firms will use green, The Committee on Standalone Micro- is the more affluent and urban seg-
orange, and red to depict the complex- insurance Company set up by IRDAI has ment. This segment is more profitable
ity of the products on offer. recommended that entry-level capital
requirement for standalone Micro-in- and comparatively easier to convert
While green will signify that the prod- surance companies (SAMIs) should be into clients," the committee said.
uct on offer is simple to understand, reduced to Rs 20 crore from the cur- By implementing changes to facilitate
orange will mean it is moderately com- rent level of Rs 100 crore, in order to standalone micro-insurance businesses
plex. Red will give out the impression provide insurance protection to around with reduced capital requirement,
that the product offered is complex. 500 million people in the low-income more people will have the opportunity
The regulator has sought comments by group. of obtaining financial protection and
October 15. Every insurance advertise- security, enabling them to emerge
ment shall also mention the colour "The minimum capital requirement of from poverty and to move towards self-
code, said IRDAI. Rs 100 crore stipulated under the In-
surance Act has acted as the biggest reliance, the panel said in its report to
These guidelines are only applicable to impediment to the expansion of the theIRDAI.
individual health products, as the regu- micro-insurance market," the commit- The report said risk-based capital (RBC)
lator is of the opinion that the group tee said in its report. Large insurers approach should be adopted to enable
health insurance products are chosen have not worked on building trust with the progressive growth of the micro-
by institutions considered as better in- low-income clientele. This segment is insurance business while maintaining
formed entities. particularly vulnerable to mis-selling, the highest prudential standards. "Mi-
The IRDAI has set a number of param- fraud and at times their trust has been cro-insurance companies should be al-
eters, based on which the products on shaken. While the market has ex- lowed to act as composite insurers to
offer will be given a score between 0 panded, there has been limited impact transact both life and non-life business
and 6. A product will be assigned on the lives of those from low- and through a single entity," it said.

The Insurance Times, October 2020