REGULATIONS

OF

MICRO-INSURANCE

MICRO-INSURANCE

DIVISION OF MICROFINANCE

MICRO-INSURANCE

• Micro-insurance looks to aid poor families by offering insurance plans tailored to their needs.

• Because the coverage value is lower than a usual insurance plan, the insured people pay considerably smaller premiums.

INSURANCE REGULATORY & DEVELOPMENT AUTHORITY

(MICRO-INSURANCE) REGULATIONS, 10th NOVEMBER,2005

1.DEFINITIONS

• Act - Insurance act,1938

• Authority - IRDA

• Family - Husband, Wife, Dependant parents, maximum 3 children

More than 3 - 1st 3 children

Micro-insurance agentAppointed by an insurer to act as micro-insurance

agent for distribution of micro-insurance products

Micro-insurance agents:Non-Government organization (NGO)Self help group (SHG) Micro-finance institution (MFI)

POLICY & PRODUCT• Micro-insurance policy

Insurance policy sold under a plan which has been approved by authority

• Micro-insurance productGeneral micro-insurance product or Life

micro-insurance product, proposal form & all marketing materials

General micro-insurance product

Any health insurance contract covering belongings, such as

HutLivestock orTools or Personal Accident (Group or Individual)

Life micro-insurance product

• Any term insurance contract with or without return of premium,

• Any endowment insurance contract or health insurance contract, with or without an accident benefit rider

• Either group or individual

2.TIE UP between Life Insurer & Non-life Insurer

• An insurer carrying on life insurance business may offer life micro-insurance products as also general micro-insurance products

• An insurer carrying on general insurance business may offer general micro-insurance products as also life micro-insurance products

3. Distribution of micro-insurance products

• In addition to an insurance agent licensed under the act, regulations made by the authority for licensing of individual or corporate agents or insurance brokers, as the case may be, micro-insurance products may be distributed through the micro-insurance agents

• A micro-insurance agent shall not distribute any product other than a micro-insurance product

4. Appointment of micro-insurance agents

• A micro-insurance agent shall be appointed by an insurer by entering into an agreement, including the duties of both the micro-insurance agent and the insurer

• A micro-insurance agent shall not work for more than one insurer carrying on life insurance business and one insurer carrying on general insurance business

5. Employment of specified persons by micro-insurance agents

A micro-insurance agent shall employ specified persons with the prior approval of the insurer for the purpose of discharging all or any of the functions

6. Code of conduct of micro-insurance agents

Any violation by a micro-insurance agent of the code of conduct shall lead to termination of his appointment, in addition to penal consequences for breach of code of conduct

7. Filing of micro-insurance product design

• Every insurer shall be subject to “File and Use”procedure with respect to filing of micro insurance products with the authority

• Every micro-insurance product which is cleared by the authority shall carry the caption “micro insurance product”

8. Issuance of contracts

• Every insurer shall issue micro-insurance contracts to the individual micro-insurance policyholders in the vernacular language which is simple and easy understood by the policyholders

• If not, issue a detailed write-up about the policy details in the vernacular language

9. Underwriting

No insurer shall authorize any micro-insurance agent to underwrite any insurance proposal

10. Capacity building

Every insurer shall impart at least 25 hours of training at its expense and through its designated officers in the local vernacular language to all micro-insurance agents and their specified persons

11. Remuneration/commissionA micro-insurance agent may be paid

remuneration including commission by an insurer under certain limits

• Life insurance businessSingle premium policies- 10%Non single premium policies- 20%

• Non Life insurance business- 15% of premium

12.Overall compliance

Every insurer shall ensure that all transactions are in accordance with the provisions of the act, the IRDA act & the rules and regulations made there under

13. Submission of information

Furnish information in such form and manner containing such particulars as may be required from authority from time to time

14.Obligation to rural & social sectors

• All policies may be reckoned for the purposes of fulfillment of social obligations by an insurer

• Where a policy is issued in a rural area & falls under the social sector, such policy may be reckoned for both separately

15. Handling of complaints

• Every insurer shall send a quarterly report to the authority regarding handling of complaints against the micro-insurance agents

• In particular quarter there are no complaints, a “Nil” report shall be spent

16. Inspection by authority

The authority may cause inspection of the office and records of any micro-insurance agent, at any time

General micro-insurance

Life micro-insurance

THANK YOU…