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All-in-one insurance policy plan

GS2/GS3

 Syllabus: Social Justice: Social Security/Insurance Sector

 

Source: TH

 Context: The Insurance Regulatory and Development Authority (IRDA) in India is working on an all-in-one policy plan to address the low insurance penetration in India.

Aim:

  • To offer an affordable bundled insurance product that covers health, life, property, and accident risks.
  • To expedite claim settlements by linking death registries onto a common platform
  • To create a “UPI-like moment” in insurance, similar to the Unified Payments Interface (UPI) in the banking sector

 

Plan by IRDA (Bima Trinity of the policy):

  • Bima Sugam: The portal will integrate insurers and distributors, providing customers with a one-stop shop for purchasing insurance policies and managing service requests and claim settlements. It will also be integrated with digitized birth and death registries
  • Bima Vistar: It will be bundled risk cover product, which offers defined benefits for each risk and aims to provide faster claim payouts without the need for surveyors.
  • Bima Vaahaks: The third component of the plan involves deploying a women-centric workforce called Bima Vaahaks (carriers) in each Gram Sabha (village council) to promote the benefits of insurance products.

 

Other plans:

  • State-level insurance committees: To achieve the goal of providing insurance coverage for all citizens by 2047, the IRDA plans to establish State-level insurance committees and involve State governments in formulating district-level insurance plans.
  • Amendment to insurance laws (Insurance Act, 1938) to allow differentiated capital requirements for niche insurers, attract more investments, and enable the addition of value-added services to insurance policies.

 

Benefits:

  • It will provide citizens with anaffordable single policy that covers health, life, property and accident
  • Settling claims within a short timeframe (potentially within six to eight hours or a maximum of one day)
  • Will allow policyholders to easily access their policies and submit death certificates, enabling quick processing and transfer of funds.

 

Issues with the current Insurance law: 

The current insurance laws in India do not allow the inclusion of value-added services along with insurance policies. For instance, insurance companies are restricted from offering additional benefits like an annual yoga membership or nursing services for policyholders’ parents who live far away.

Also, In 2022, India’s life insurance penetration stood at around three percent, while the non-life insurance penetration was much lower at one percent.

 

About IRDA 

The Insurance Regulatory and Development Authority of India (founded 1999; HQ: Hyderabad) is a statutory body (under the IRDA Act 1999) and is under the jurisdiction of Ministry of Finance and is tasked with regulating and licensing the insurance and re-insurance industries in India.

 

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